Oral Answers to Questions

DEFENCE

The Secretary of State was asked—

Iraq

Desmond Swayne: What recent representations he has made to EU Defence Ministers regarding Iraq.

Geoff Hoon: Before answering this question, I should be grateful for the House's permission to pay a brief tribute to one of my distinguished predecessors, Viscount Younger of Leckie, who died yesterday. George Younger was a well-liked and respected Member of this House for 28 years from 1964 to 1992. He served as Secretary of State for Scotland between 1979 and 1986 and was Secretary of State for Defence between 1986 and 1989. I am sure that the House will join me in sending our sincere sympathies to Lady Younger and other members of his family.
	I have discussed Iraq in the context of talks on a range of defence issues with a number of European counterparts. In particular, I met my French and German counterparts last November and my Italian counterpart earlier this month.

Desmond Swayne: I thank the Secretary of State for his gracious words about Lord Younger.
	Given the different views that are now clearly emerging in European capitals, which are reinforced by the remarks of Mr. Solana, are not the emphasis and policy so different as to make nonsense of a common European defence policy?

Geoff Hoon: I am not sure that I agree that there are such different views. The only country that has specifically ruled out the use of military force is Germany. There was an agreement at the Copenhagen summit to support United Nations resolution 1441, and I anticipate that at its meeting today the General Affairs and External Relations Council will again issue a unanimous declaration supporting resolution 1441, making it clear to the Iraqi Government that they have a final opportunity to resolve the crisis peacefully. I do not detect the disunity that may be implied by the hon. Gentleman's question.

Jeremy Corbyn: Does the Secretary of State not recognise that Britain's position is, far from being in the mainstream, quite isolated from the rest of European opinion, that nobody in Europe believes that resolution 1441 gives authority to take military action and that the overwhelming majority of public opinion in this country and throughout Europe is strongly against military action? Will he confirm that there is no question whatever of Britain, alongside the United States, taking unilateral action to attack Iraq and that instead he will listen to the voices of reason and peace that are so loud in Britain, Europe and the United States?

Geoff Hoon: I believe that I have already answered the first part of my hon. Friend's question. I simply do not accept that Britain is isolated; moreover, in all the meetings and discussions that I have had with European counterparts there is a consistency of view about the need to ensure that Security Council resolution 1441 is implemented. If my hon. Friend looks at the terms of the resolution, he will see that it calls for further discussion by the Security Council before any further action is taken, and that is precisely the British Government's view.

Patrick Cormack: In wishing the Secretary of State well at this very difficult time, may I ask how many of his counterparts in the European Union have said that they would be prepared to place forces at the disposal of a coalition against Saddam Hussein?

Geoff Hoon: I do not believe that all countries have yet made that announcement. They are all determined, as we are, to seek a political and diplomatic solution to the problem before resorting to military force. I refer hon. Members to the recent statement by President Chirac of France in which he said that it was necessary for French forces to be ready for any eventuality.

Alice Mahon: Did the Secretary of State discuss with Ministers the Pentagon battle plan "Shock and Awe", which in the words of the US military strategist Harlan Ullman would have a Hiroshima effect and take down the city, presumably killing thousands and cutting water and power? Is not such a plan a war crime, and will the Secretary of State tell his friends in the White House that we will have nothing to do with such barbarity?

Geoff Hoon: As I have indicated to my hon. Friend on previous occasions very recently, no decisions have been taken about military force. Clearly there have been decisions about the contingencies necessary, and I hope that she agrees that it is necessary clearly to indicate our willingness to use force in order to support the diplomatic and political process at the United Nations, which is supported by this Government.

Boris Johnson: Given the widespread anxiety among people who are perfectly willing to be persuaded that there is a case for war against Saddam Hussein, will the UN weapons inspectors, if they ask for more time to carry out their inspections, be given that time, and if so, how much more time will they be given? Who will decide how much more time they should be given?

Geoff Hoon: I am sure that if the hon. Gentleman is patient and waits a few more minutes, the initial report by the weapons inspectors will be made to the United Nations Security Council in New York. We will be in a much clearer position to answer his questions when we see the nature of that report.

Bernard Jenkin: May I first thank the Secretary of State for his extremely kind words about Lord Younger of Leckie, who was not only an esteemed statesman, but a great friend of many Conservative Members? The right hon. Gentleman's words will be of great comfort to Lord Younger's family.
	I question what the Secretary of State calls unity in the European Union on the matter of Iraq. Does he agree that the only person who gains from the present disunity is the dictator Saddam Hussein? No Government have done so much to sell the idea of a common EU defence than this one, but Europe is clearly more divided than ever. As he reads the words of the EU high representative attacking the Government's policy, does he agree with the United States Secretary of State, Colin Powell, that that is the old Europe speaking, or is it, indeed, the new Europe, which is more divided from the US than ever?

Geoff Hoon: Again, I have dealt with unity. On one factual matter, however, the hon. Gentleman should look at the signature at the end of the Maastricht treaty, which first gave expression to the concept of developing European defence. To the best of my recollection, that was signed by a Conservative Prime Minister, presumably supported at the time by both a Conservative Foreign Minister and a Conservative Defence Secretary. He should have regard to that as a matter of historic record. However, I agree to the extent that it is important that there should be unity of purpose, as demonstrated by the unanimous vote of the UN Security Council on resolution 1441 and the Copenhagen European Council. I am sure that it will also be demonstrated by the General Affairs and External Relations Council today. All those bodies have given consistent support to the agreed international position adopted by all countries.

Bernard Jenkin: I think that President Chirac would be surprised to hear that the Government believe that Europe is speaking with one voice on the issue. The Government clearly said this morning that Iraq's failure to make a full declaration in December and its failure actively to co-operate with the weapons inspectors is a material breach of UN Security Council resolution 1441, which says that serious consequences must follow. Even if we cannot get unity in Europe, is that the view of the whole Cabinet? Will the International Development Secretary express that view and stick to it when she appears before the House of Commons on Thursday? How can the Government expect to win public support for their policy if there is any doubt that the Cabinet is united?

Geoff Hoon: The hon. Gentleman is well aware of the doctrine of collective Cabinet responsibility to which all Cabinet members subscribe. I have no difficulty in pressing on him the various constitutional law text books that I used to read. I can even give him an old tutorial paper if he wishes to study the detail.
	On unity, I will not upset the hon. Gentleman further by quoting President Chirac again, but the President has made it clear to French forces that they need to be ready for military action should that be decided by the French Government. That is precisely the position of the British Government. If British forces are needed, they will be available to support the will of the international community.

Paul Flynn: Whether he intends to amend the information, which he provided for the dossier on Iraq published on 24 September 2002.

Geoff Hoon: The British Government's assessment of Iraq's weapons of mass destruction, published on 24 September 2002, was based on the work of the Joint Intelligence Committee. The dossier provides a detailed assessment of Iraq's weapons of mass destruction capabilities, including chemical and biological weapons, as well as efforts to acquire nuclear weapons. There are no current plans to amend it.

Paul Flynn: So much for the value of British intelligence. All the sites mentioned in the dossier have been visited by UN and International Atomic Energy Agency inspectors. The Government say that they have discovered no signs of any weapons of mass destruction and no evidence that those sites were ever used for their production. We also know that on the day on which the report was published, journalists visited the sites and found some of them derelict and the others used for benign purposes. Is it not crazy that the House took that piece of evidence from the Government in good faith, because we now know that it was a piece of vacuous propaganda? Would it not be greater folly if we continue to trust the intelligence that we have and make up more fairy stories about the threat from Iraq, so sending our soldiers to kill and be killed on the basis of further falsehoods?

Geoff Hoon: I am sorry that my hon. Friend appears willing to believe the Iraqi Government before his own Government. It is perfectly likely that since the publication of the dossier of weapons of mass destruction the Iraqi Government have moved large quantities of material. Indeed, there is already some evidence of that. Before reaching the conclusions that my hon. Friend appears to have reached, he should at least have assessed the probability that Saddam Hussein has not co-operated entirely with the weapons inspectors—a matter that, I anticipate, they will make clear in the weeks ahead.

Simon Thomas: Will the Defence Secretary take the opportunity to reissue that dossier, fully taking into account the assessment of Hans Blix and the Security Council, and will he add to it his own assessment of the humanitarian cost and the cost to the civilian infrastructure of a war in Iraq so that people of this country can decide whether they support such an effort?

Geoff Hoon: Of course, since the publication of the dossier, a United Nations Security Council resolution has been passed authorising the weapons inspectors to go about the task of investigating the whereabouts of weapons of mass destruction, so it would not make sense at this stage to attempt to duplicate their work. They are doing that work on behalf of the international community and we support their efforts very strongly.

Bill Olner: Does my right hon. Friend not connect the weapons of mass destruction that Saddam Hussein now has with the weapons of mass destruction that we know he used against his own people in the past?

Geoff Hoon: My hon. Friend is quite right. Indeed, one of the significant omissions from Iraq's declaration before Christmas concerned its failure to account for large amounts of chemical and biological equipment recorded by UNSCOM way back in 1998. It has made no effort whatsoever to explain to the world what has happened to those items and, indeed, to a range of other materials that clearly fall into the category of weapons of mass destruction.

James Gray: The Government have produced a dossier on weapons of mass destruction, and have produced a separate dossier on human rights abuses in Iraq. The third string in their justification for what is happening at the moment is the alleged links between Saddam Hussein and terrorist groups, particularly al-Qaeda. Will the Secretary of State produce a dossier laying out precisely what those links are, as some people believe them to be a little thin?

Geoff Hoon: We are aware that there are well-established links between the Iraqi regime and terrorist organisations. The links with al-Qaeda are much less strong, as I have made clear to the House over a period of time, and certainly the case for a connection with the events of 11 September 2001 is not at all persuasive. Nevertheless, it clearly can be argued that Saddam Hussein has consistently supported terrorist groups. Part of the concern, as set out by my right hon. Friend the Prime Minister the other day, is that at some stage his weapons of mass destruction may fall into the hands of terrorist groups willing to use them.

Malcolm Savidge: One of the moral justifications given by Britain and the United States for contemplating war against Iraq in 2003 is that in the 1980s Saddam used chemical weapons obtained from us and other major powers against the Iraqi people. Is speculation that we may use nuclear weapons against the Iraqi people designed to demonstrate our moral or our military superiority?

Geoff Hoon: My hon. Friend proceeds on a wholly false basis. The use of force against Iraq would be in support of an agreed United Nations position once there had been a discussion in the UN Security Council on the proper course of action. I want to make it clear to my hon. Friend that efforts to bring Iraq into line are efforts of the international community—something with which I would have expected him strongly to agree.

Defence Capabilities Initiative

Mike Gapes: If he will make a statement on Britain's contribution to NATO's defence capabilities initiative.

Adam Ingram: The United Kingdom has long supported and worked towards the improvement of NATO's capabilities. We have a good record among allies for implementing improvements related to NATO's defence capabilities initiative, and have made a significant contribution to the Prague capabilities commitment—a new initiative launched at the summit in November.

Mike Gapes: I am grateful to my right hon. Friend for that reply. Does he agree that a world where one country spends the equivalent on defence of that spent by the next 15 added together is not entirely healthy? Does he agree that the best way that Europeans, particularly countries such as Germany, can exert more weight in current debates is not to cut their defence spending but to make a greater contribution to the collective defence of NATO, so that the European collective voice is backed up by capabilities and we are not always dependent on one hyperpower?

Adam Ingram: I agree with the general thrust of that question. Given this country's commitment to a substantial increase in our defence budget, we are setting standards that—hopefully—our European neighbours and allies will follow. To improve the capabilities set out in the various initiatives—whether that be the NATO capabilities initiative or one in the European Union—requires expenditure, but that must be properly targeted to deliver the broad range of capabilities that we desire.

Julian Brazier: Will the Minister take this opportunity to set right a no doubt inadvertent error made by the Secretary of State at the previous Defence Question Time? In answer to a question asked by my hon. Friend the Member for North Essex (Mr. Jenkin) on the percentage of gross domestic product spent on defence, the Secretary of State said:
	"There were periods during the Conservatives' control of defence when the percentage was higher, but equally there were periods when it was lower."—[Official Report, 9 December 2002; Vol. 396, c. 4.]
	The House of Commons Library has published figures showing that the percentage is now much lower than at any time since the 1930s, and we are on the brink of a major war. Will the Minister please set the record straight?

Adam Ingram: I will study what the House of Commons Library has said and write to the hon. Gentleman.

Michael Clapham: My right hon. Friend will be aware that the decision taken in Prague to set up the NATO response force was indeed to make NATO more effective in changed circumstances. Does he believe, however, that decisions on that force acting out of area will be made by NATO and beyond the diktat of the United States?

Adam Ingram: NATO operates as a collaborative partnership; it can succeed only on that basis. That is why, increasingly, effort has been put into ensuring that capabilities are lifted progressively, so that we can deliver on the key objectives. As the contributions made by NATO allies will be part of that collaborative whole, the international response to any threat will be one that I know my hon. Friend would always want. That is clearly NATO's underlying principle, and one to which the Government strongly adhere.

Keith Simpson: May I associate myself with the Secretary of State's comments about Viscount Leckie? When he was George Younger, I worked with him as a special adviser at the Ministry of Defence. He worked tirelessly on behalf of the armed forces, and the Secretary of State's comments will be much appreciated.
	We all agree that it is very important in any multinational military operation that any casualties from so-called friendly fire are prevented. Concern has been expressed by retired and serving soldiers that UK armed forces deployed to the Gulf do not yet have credible electronic identification friend or foe equipment. In reply to my hon. Friend the Member for North Essex (Mr. Jenkin) during last Monday's statement on Iraq: Further Contingency Preparations, the Secretary of State said:
	"action is in hand to procure the necessary equipment to ensure that the equipment used by our forces is in every way compatible with the equipment that the United States is using."—[Official Report, 20 January 2003; Vol. 398, c. 37.]
	Will the Minister tell the House whether that equipment is being procured from Britain, America or some other NATO country? Secondly and most importantly, when does he expect our equipment to be operationally effective with IFF in the next few weeks?

Adam Ingram: We are currently involved in a procurement process to enhance the technical capability of our equipment, but the matter is much more profound and complex than that. There is a range of other issues that need to be addressed. That procurement is not a matter that we discuss openly, nor do we clearly identify the equipment that we are putting in place. I know that the hon. Gentleman would expect such a rule to be rigorously applied. We do not divulge all our technical capabilities, for very obvious reasons.

Iraq

Nick Palmer: What assessment he has made of the progress of weapons inspections in Iraq.

Geoff Hoon: We maintain regular contact with UNMOVIC and the International Atomic Energy Agency about the progress of inspections. Dr. Blix and Dr. el-Baradei will be reporting to the United Nations Security Council later today. Dr. Blix had a meeting with my right hon. Friend the Prime Minister on 17 January at which he told the Prime Minister that, although the inspectors had encountered no direct obstruction in carrying out their tasks, the onus was on Iraq to be more proactive in its co-operation.

Nick Palmer: Polls consistently show that two thirds of the public are prepared to support the Government in military action if the inspectors report consistent obstruction and the Security Council endorses that. I have had that view confirmed by my own constituency poll. However, there is widespread concern that we will plunge in, regardless. Does the Secretary of State agree that if the inspectors ask today for more time to reach a conclusion, most people would want Britain strongly to support that request?

Geoff Hoon: As I indicated to the House earlier, it is probably best that we should wait the relatively short time before Dr. Blix reports to the United Nations Security Council to see what, if any, requests he makes. I draw my hon. Friend's attention to what my right hon. Friend the Prime Minister said yesterday, namely, that the inspectors have
	"got to be given the time to do the job".
	That is the British Government's position. We want to see them complete the task set out by the Security Council, but we want them also to be allowed to carry out that task by the Government in Iraq.

Paul Keetch: I associate myself and my right hon. and hon. Friends with the words of condolence to the family of Lord Younger. Does the Secretary of State agree that the weapons inspectors must be given the time to perform their tasks, and that it should be the United Nations, after listening to Dr. Blix, that should decide on the timing of such inspections? It was the strong view of many members of the armed forces whom I met last week in Kuwait, that any force should be UN-authorised, and that although there are concerns about climatic conditions in the Gulf, it should be the UN, not the weather, that determines the timing of any conflict. Can the Secretary of State confirm that British forces remain under US Centcom command and will stay under Centcom command if hostilities break out? What plans are there to redirect or withdraw British forces, should the US engage in military action in which the UK does not participate?

Geoff Hoon: I would have been much happier with the hon. Gentleman's question if he had said not that the weapons inspectors require more time, but that they require to see disarmament. That is central to the United Nations Security Council resolution, around which there was a unanimous view on the part of the Security Council. We want to see the Government of Iraq accepting their responsibilities to disarm under Security Council resolution 1441. That is the position of this Government and of the other 14 members of the Security Council, as well as of the European Union, NATO and every other responsible Government in the world.

Jonathan Djanogly: Does the Secretary of State give any credence to the rumours that the United Nations inspectors have not been getting the level of information that they required from western intelligence sources? If that is the case, why is it the case?

Geoff Hoon: I know that there are rumours to that effect, but I can assure the hon. Gentleman, as I assure the House, that this country in particular has co-operated fully with the weapons inspectors and has ensured that both equipment and information have been made available to them, which I believe has allowed them better to do their job.

Glenda Jackson: What credence does my right hon. Friend attach to recent reports that the issuing of protective clothing to Iraqi troops is proof positive, despite denials, that Saddam Hussein has and intends to use weapons of mass destruction? Does that mean that the issuing of protective clothing to British troops means, despite denials, that we have such weapons and also intend to use them?

Geoff Hoon: The authenticity of the report is obviously a matter for the BBC, which I think was first responsible for broadcasting it. That particular report is certainly consistent with previous reports that this Government have received and, indeed, with the dossier that we published last September. Obviously, it is a matter of grave concern to this country and other members of the international community that Saddam Hussein has weapons of mass destruction, including the sort of chemical weapons against which it would be necessary for Iraq to protect its forces with the sort of equipment that the BBC has described. I can assure my hon. Friend that such chemical weapons are not part of the United Kingdom's arsenal.

Ann Clwyd: Since the Kurds of northern Iraq are likely to be in the front line of any military action, and since chemical and biological weapons have been used against the Kurds in the past, has any consideration been given to providing the Kurds with protective clothing in the event of military action?

Geoff Hoon: My hon. Friend is right to express concern about the population of northern Iraq. That is precisely why British forces risked their lives in order to protect people in the area because of previous appalling attacks on the Kurds. Obviously, we do not control the ground in northern Iraq, which is a difficult part of the world. While it is arguably safer than many other parts of Iraq, it is still extremely dangerous territory.

Edward Leigh: May I press the Secretary of State further on the question asked of him by my hon. Friend the Member for Huntingdon (Mr. Djanogly), which I think is one of the key questions? I believe that the Prime Minister is absolutely sincere in saying that Saddam has weapons of mass destruction, and I understand that this is not a game of hide and seek. Does the right hon. Gentleman accept, however, that what the public do not understand is that while the Prime Minister is saying there is clear evidence, the UN is finding so little? May I press him further to reassure the general public and the House that all the information that he has that convinces him that Saddam is in possession of such weapons is passed to the UN inspectorate, so that we can get clear evidence in front of the British people?

Geoff Hoon: I do not think that it is a great surprise to the weapons inspectors that there are weapons of mass destruction in Iraq. Weapons inspectors have been in Iraq over many years since the end of the Gulf war, bearing in mind that it was a condition of the ceasefire that Iraq should abandon its programmes for the development of weapons of mass destruction. I accept that the issue is convincing the present set of inspectors that they have found proof on the ground that there are weapons of mass destruction in Iraq, but, equally, I invite hon. Members to look carefully at the terms of the UN resolution. It is a question of ensuring the co-operation of Iraq with the terms of that resolution. There is an obligation on Iraq to produce the material that it has. Although it has made a declaration, it is already clear that that declaration is insufficient, but we certainly await the further report of the weapons inspectors to take the matter further at this stage.

Wind Farms

Gareth Thomas: What assessment he has made of the impact of wind farms on military radar; and if he will make a statement.

Lewis Moonie: Trials conducted by the Royal Air Force in 1994 and 1997 found that a wind farm in direct line has a detrimental effect on civilian and military radar performance, as the rotating blades can be a source of interference. The turbines can appear as genuine aircraft targets that could either mask aircraft responses or desensitise the radar within the sector containing the wind farm, and they can also cause an unquantifiable general effect on radar.
	The Ministry of Defence is currently assisting with a Department of Trade and Industry sponsored study, which is being undertaken by Qinetiq, on the effects of turbines on radar systems. The aim is to identify ways in which adverse impacts can be reduced, including technical adaptations to turbine design. That study began in September 2001 and is due to be completed shortly.

Gareth Thomas: Given the potential impact on military radar, I recognise the need for the Ministry of Defence to examine each planning application for a new wind farm, but does my hon. Friend acknowledge the anxieties of several wind farm developers about the Ministry's occasional lack of speed in deciding whether to lodge an objection to a wind farm? Given the wind farm industry's considerable potential to create new jobs and reduce greenhouse gas emissions, will he consider carefully further action to speed up the Ministry's consideration of such matters?

Lewis Moonie: Yes, I shall. Every proposal to the Ministry of the Defence receives a full appraisal by at least seven separate technical advisers, each with their own specialism. The criteria for the case-by-case consideration are the effect of the development both on the ability to train our pilots safely and operational capability. We are members of a steering group on wind energy, which is considering ways to speed up the process. Between July 1996 and November 2002, our experts had to consider some 1,900 proposals from wind farm developers throughout the United Kingdom. In 2002, we were consulted on a total of 952 developers' proposals, to which we have objected to 248 so far.

Defence Information Infrastructure

Richard Bacon: What the budget and planned delivery dates are for the defence information infrastructure.

Adam Ingram: The Ministry of Defence currently spends approximately £500 million per year on its information infrastructure and related services. The defence information infrastructure programme, which will bring together all the Ministry's information networks in a single managed service, will be subject to competitive tender and is expected to deliver significant savings over current expenditure. The defence information infrastructure will be delivered incrementally, and current plans are for an initial operating capability by 2005.

Richard Bacon: The public sector's record in managing information technology projects over many years can best be described as chequered. Given that the Ministry of Defence recently had to write off costs relating to the defence management system, what special project management measures are being taken to ensure that the defence information infrastructure programme, which is so important to the UK's defence, is provided on budget and on time?

Adam Ingram: We are learning from the mistakes of the past all the time. The Office of Government Commerce is designed to capture such experiences and ensure that we identify the shortfalls and weaknesses in some big, expensive and important IT projects. As I said, the project will be provided incrementally. It has received a high level of oversight, and a McKinsey study has examined various aspects of it. We are alert to the problem of industry promises that are not always fulfilled. We are therefore putting better management resources and high-level oversight into the project. We are also keeping a close ministerial eye on it.

Iraq

Tam Dalyell: What assessment he has made of the military effects of bombing Baghdad.

Geoff Hoon: There has been no decision to take military action against Iraq. It is still not too late for Saddam Hussein to decide to accept United Nations resolutions and thereby avoid the necessity for any kind of military action.

Tam Dalyell: I echo the tribute to George Younger.
	Do not we have to think things through? Are not there three horrendous scenarios? The first is bombing on a Dresden scale, which would create unthinkable reverberations in the Arab world and destroy one of the world's great cities. The second, heaven help us, is street fighting in the alleys and sewers of Baghdad. Only those who, like me, have seen them can imagine the horrendous task of British and American forces in that situation, where the opponents know the sewers and alleyways. The third is the siege of Baghdad and, presumably, starvation of the population. If the Secretary of State knows any other scenarios, he should tell us because such matters should be thought through.

Geoff Hoon: I am grateful to my hon. Friend, at least for suggesting that we should think things through. That is precisely the British Government's position. I invite him to think through Iraq's history and its failure to comply with a series of international obligations, going back to the ceasefire provision that I mentioned earlier. It gave Saddam Hussein 15 days in which to co-operate with abandoning his programme of weapons of mass destruction. The process continues. There were some 26 United Nations obligations before what was described as the final opportunity for Iraq in resolution 1441 to comply with the will of the international community. It therefore remains up to Saddam Hussein and his regime in Iraq to comply with the decisions of the international community. I am sure that my hon. Friend would strongly support that.

Gary Streeter: Given that our quarrel is not with the Iraqi people, but with their dictator, what discussions has the Secretary of State recently had with the Secretary of State for International Development to ensure that once the bombing of Baghdad has begun—and thereafter, we hope, quickly comes to an end—we can put in place an immediate humanitarian relief and rescue package to demonstrate our commitment to the Iraqi people?

Geoff Hoon: The hon. Gentleman is certainly right that we have no quarrel with the Iraqi people, and nor have we ever had. However, it is important that the regime in Baghdad accepts the will of the international community. We set out very recently the aims and objectives of our policy in relation to Iraq, which certainly include rebuilding and restoring in Iraq a degree of representative government, and that is something that we are determined to achieve. I do not want to go into details of aftermath planning of the kind that he mentions, because that implies the inevitability of military action. Military action is still neither inevitable nor imminent.

David Winnick: Should not the Secretary of State bear it in mind that the dire warning given by my hon. Friend the Member for Linlithgow (Mr. Dalyell) used exactly the same words that he used in relation to the liberation of the Falklands, to Kuwait 12 years ago, and, much more recently, to Kosovo? On all those issues, he was wrong and was proved to be wrong. If military action is to be avoided, is there not a need for Iraq's criminal and murderous regime to be far more honest about weapons of mass destruction? How many Members of Parliament, if my hon. Friend had to hazard a guess—

Mr. Speaker: Order. That is enough questions for the Secretary of State to be going on with.

Geoff Hoon: I accept that there are those who are sincerely opposed to military action in any circumstances and those who are opposed to military action in most circumstances. I would put the Government into the second category. We want to avoid military action if at all possible. A political, diplomatic route remains available to Saddam Hussein, and we believe that he should take that route and comply with the wishes and decisions of the international community.

Peter Tapsell: May I pursue the point made by my friend and colleague of 40 years, the hon. Member for Linlithgow (Mr. Dalyell)? I am one of those who believe that, if it is definitely established that Iraq has weapons of mass destruction and is in a position to use them, we will certainly have to disarm it, but I hope that all the tactical and strategic considerations will be borne in mind. Speaking as somebody who, as a very young officer, led patrols in a hostile Arab city much smaller than Baghdad 53 years ago, I put it to the Secretary of State that as Baghdad is a city of 5 million people, if Saddam Hussein withdraws, as I suspect that he will, his entire army inside Baghdad, so that the city has to be taken street by street and house by house, the casualties—not only on our side, but on the civilian side—will be absolutely enormous. Even the German army in 1871—

Mr. Speaker: Order.

Geoff Hoon: I believe that I have probably answered the hon. Gentleman's question already, but I point out to him that he assumes that those 5 million people will be fighting for Saddam Hussein.

Tam Dalyell: On a point of order, Mr. Speaker. In view of the fact that the issue of Baghdad needs more exploration, may I be considered for an Adjournment debate on that subject?

Recruitment

Jim Cunningham: How many new recruits have joined the armed services in each of the past two years, having completed all training courses.

Lewis Moonie: The number of new recruits in the financial years 2000–01 and 2001–02 were 22,960 and 23,578 respectively. The time taken to complete full training varies, with some trades requiring well in excess of two years, but the numbers completing basic training and joining the trained strength of the armed forces in the past two years were 16,600 and 17,040 respectively.

Jim Cunningham: Given the number of young people joining the armed forces and the possibilities of a first-class career, but given also the build-up in the Gulf, can the Minister reassure us that there will be sufficient British forces for the peacekeeping missions around the world for which they are renowned?

Lewis Moonie: Yes, I can assure my hon. Friend that that is so. What is important is the proportion of those whom we recruit to initial training that we manage to bring through on to the full trained strength. Over the past few years, we have put a great deal of effort into improving the training stream to try to ensure that we lose fewer people on the way.

Patrick Mercer: The Army remains stubbornly short of about 6,000 men. We stand on the brink of war, yet sections of the Army have had their recruiting suspended. Can the Minister explain that?

Lewis Moonie: Recruiting has held up very well this year and we have reached 16,990 new recruits in total after eight months, which is 68 per cent. of the target. The Army has not stopped recruiting and it has not stopped initial training. Due to a successful Army recruiting year, the numbers have exceeded available training places for the remainder of this financial year. As a result, a small number of Army recruits who were due to commence initial training in March will be offered places in April and May 2003. There will be no effect on any immediate operational activity.

Brian Jenkins: Would my hon. Friend like to hazard an estimate of the percentage of those recruits who are from ethnic minorities within and outside this country?

Lewis Moonie: I can answer that very briefly—not sufficient, but the numbers are increasing. There are gratifying signs that we are recruiting more effectively from ethnic minorities, and we shall continue to put a great deal of effort into increasing the percentage.

Armed Forces (Gulf)

George Osborne: If he will make a statement on the size of United Kingdom armed forces on duty in the Gulf.

Geoff Hoon: UK armed forces on duty in the Gulf region include about 1,000 Royal Air Force personnel supporting patrols over the no-fly zones and about 1,500 Royal Navy, Royal Fleet Auxiliary and RAF personnel supporting our contribution to the campaign against international terrorism. As part of our continuing preparations for possible military action in Iraq, a relatively small number of service personnel are working in liaison and planning teams in the Gulf region. In addition, a wide range of personnel from all three services perform defence diplomacy duties throughout the Gulf region.

George Osborne: Does the Secretary of State agree that many thousands of those soldiers face weeks of anxiety and uncertainty as the campaign in Iraq hots up? Will he join me in condemning those insurance companies, such as Norwich Union and Prudential, that refuse to provide life assurance cover to them? When does he plan to talk to those insurance companies so that at least that part of those soldiers' fears and anxieties is addressed?

Geoff Hoon: The situation was dealt with effectively on behalf of the insurance companies by the Association of British Insurers, which indicated that the recent report in The Times was "misleading and inaccurate". Those are its words. It went on to say that life cover for members of the armed forces can usually be purchased at standard premium rates, that existing life insurance policies will continue in force and that armed forces personnel are encouraged to recognise the long-term nature of life insurance. So, there seems to be a clear view from the insurance companies that policies will continue to be available.

Kevin Brennan: One anxiety faced by our armed forces in situations where there may be conflict is the possibility of casualties due to friendly fire. Given the revelations from the investigation of the friendly fire killings of four Canadian soldiers in Afghanistan last year, will the Secretary of State tell the House what representations he has made to the United States authorities on the issuing of amphetamines to US pilots when they go into combat? Given that the side effects include irritability and heightened awareness all round, will he confirm that he has made representations to his US counterpart on the use of amphetamines in any military action?

Geoff Hoon: I dealt with that question the other day. A disciplinary inquiry is under way in the United States, where the use of amphetamines by two pilots has been alleged, and the House should await the result of that inquiry before I comment on it.

David Heath: The Secretary of State obviously did not hear the question asked by my hon. Friend the Member for Hereford (Mr. Keetch), so I shall repeat it. Are the British forces in the Gulf currently under US Centcom command, will they remain so if hostilities break out, and what plans are there to withdraw or redirect British forces should American forces engage in hostilities without British participation?

Geoff Hoon: The question asked by the hon. Member for Tatton (Mr. Osborne) related to British forces on duty in the Gulf, and I answered that. Those on duty in the Gulf are currently performing acts of planning and liaison with relevant authorities, and not simply with the US authorities.

Diane Abbott: Is the Secretary of State aware that, if British forces are used in the war against Iraq, there will be concern not only about the military effect of action but about its politically destabilising effect throughout the Arab world and throughout the entire Muslim world from northern Nigeria to the streets of Bradford? Does he agree with the President of Egypt, Mr. Mubarak, who said a few months ago that, if America and Britain attacked Iraq without an explicit UN resolution, not one regime in the middle east would be able to contain its population?

Geoff Hoon: I have had conversations with a good number of representatives of various countries in the Gulf and the wider middle east. Their views were not in accord with that expressed by my hon. Friend. Clearly, there are concerns about the destabilising effect of possible military action, should it prove necessary. However, there are stronger concerns about the politically destabilising situation of allowing Saddam Hussein to continue in power, particularly if he develops and is able to use weapons of mass destruction. I do not believe that views on what is politically destabilising are necessarily as consistent as my hon. Friend might suggest.
	May I assume from what my hon. Friend said that, if there is a second UN resolution authorising the use of force, she will strongly support it?

Iraq

Mark Prisk: What progress his Department has made in its contingency arrangements for military action against Iraq; and if he will make a statement.

John Barrett: What plans he has for the use of military forces in Iraq.

Geoff Hoon: No decision has been taken to use military force in Iraq. It is clear that Saddam Hussein will comply with international law only when diplomacy is backed up with a credible threat of force. That is why it is necessary to prepare our armed forces for any military operations, as set out in recent statements to the House.

Mark Prisk: On 7 January, the Secretary of State said that, to tackle the dreadful problem of friendly fire, which has been referred to already, the Government would
	"acquire new equipment that will be available in time for any potential conflict".—[Official Report, 7 January 2003; Vol. 397, c. 28.]
	Has that equipment been acquired? Will it be fitted to protect every operational vehicle, and not just some?

Geoff Hoon: New equipment is being acquired, as I have told the House more than once. Combat identification is not just about fitting equipment. We must also ensure that our forces and those with which we are in coalition are aware of our positions, and aware of accurate and agreed target identification, tactics and other techniques and procedures. That is a complex process, and it is under way with those responsible for preparing and planning for the necessity of any military operations in Iraq.

John Barrett: If there is no specific UN mandate for military action against Iraq, what will the Secretary of State do to receive the backing of the millions of people in this country who are against action being taken in their name without such a resolution?

Geoff Hoon: The hon. Gentleman anticipates a situation that has not yet arisen. I assure him that this country wants effective action to disarm Iraq of its weapons of mass destruction. I believe that the country will strongly support the Government's efforts to achieve that laudable end.

Joan Ruddock: Pentagon officials were quoted this weekend referring to
	"an aerial bombardment so intense that Iraqi forces will be disabled and demoralised, making a ground assault unnecessary."
	Despite what my right hon. Friend the Secretary of State said earlier to my hon. Friend the Member for Halifax (Mrs. Mahon), does he plan for and will he commit British troops to such an assault on Baghdad? If so, is it not incumbent upon him to make some estimate of the humanitarian cost of such action?

Geoff Hoon: I assure my hon. Friend that all decisions taken by the British Government in relation to any possible action against Iraq will be in conformity with international law, the humanitarian element of which is significant.

Neil Gerrard: The Secretary of State has said that he would prefer a second UN resolution before any military action, but that he would not feel bound by the unreasonable use of the veto. If another country uses the veto—as is provided for within the rules of the UN—what does he think is within the UN charter that gives him, the Prime Minister or George Bush the right to decide that it is unreasonable and ignore it?

Geoff Hoon: It is important that we allow the process set out in resolution 1441 to unfold without anticipating what might or might not happen in the future.

John Bercow: The Secretary of State's gracious tribute to the late Lord Younger will be widely appreciated, not least by his son James, who happens to be a constituent of mine. Does the right hon. Gentleman accept that studied inactivity is not an option; that appeasement, whatever the intentions of those who advocate it, is invariably disastrous; and that, if we do not take the steps and show the moral courage necessary to act, if it is unavoidable so to do, future generations will not forget the fact and will not forgive it, either?

Geoff Hoon: It is clear that the policy of containment, if it has not actually failed, is certainly failing. Therefore, it is incumbent on the international community—as the unanimous vote of the Security Council in November recognised—to take action to deal with the threat posed by Iraq's weapons of mass destruction. Certainly we do not have the choice of doing nothing. Saddam Hussein has a choice: he can choose to disarm, or, as my right hon. Friend the Prime Minister has made clear, the international community will have to disarm Iraq of its weapons of mass destruction.

Julian Lewis: As my hon. Friend the Member for Buckingham (Mr. Bercow) made clear, the Government can count on possibly stronger support from the Conservative Opposition than from many of the Secretary of State's own colleagues if the taskforce goes into action. If it does, is it not the case that it must be adequately defended? Is he content that, out of our three aircraft carriers, only one is available? Is he content that that one has been converted to the role of a commando and helicopter carrier largely because of the paying-off of Fearless before Albion became available? Is he also content that the most experienced pilots of Sea Harriers will not be deployed? Is he not worried that some will feel that that may have less to do with the availability of alternative land-based aircraft and more to do with the fact that if the Sea Harriers and their pilots distinguish themselves in any conflict, it will show how unwise it will be to phase out the Sea Harriers—

Mr. Speaker: Order. The Secretary of State only has to answer one question.

Geoff Hoon: I suppose that I should congratulate the hon. Member for New Forest, East (Dr. Lewis) on his obsessions, but he should not allow them to get in the way of sound military planning.

John Bercow: He has a doctorate in it.

Geoff Hoon: We have sound military advice from those responsible as to how best to configure the force that is being planned to take military action in Iraq, should that be required. [Interruption.] I am getting some helpful advice from Conservative Front Benchers that the hon. Member for New Forest, East has a doctorate in obsessions. I thought it better to suggest that he had a doctorate in armchair generalship.

Africa (Conflict Prevention)

Hugh Bayley: What assistance his Department is giving to conflict prevention in Africa.

Adam Ingram: The Ministry of Defence contributes to the Government's conflict prevention efforts in Africa in close co-operation with the Foreign and Commonwealth Office and the Department for International Development through the interdepartmental conflict prevention pool. Together, we are also working with our partners in the G8 and Africa to increase the impact and effectiveness of existing and emerging conflict reduction efforts.

Hugh Bayley: In view of the important contribution that British military advisers have made to the search for a durable peace in southern Sudan, will my right hon. Friend look at the prospects for building a ceasefire between the Ugandan Government forces and the Lord's Resistance Army in northern Uganda? Will he especially take advice from our high commissioner in Kampala on the views of members of the Ugandan Parliament who come from northern Uganda as to whether it might be possible to broker a ceasefire there as well as in southern Sudan?

Adam Ingram: My hon. Friend is a specialist on all matters relating to Africa and raises a most important issue: how we take forward conflict prevention. At all times, we must examine the whole range of practical options that can be delivered. I shall certainly take account of the views that he has expressed and ensure that they are actively considered.

Child Support Reform

Andrew Smith: With permission Mr Speaker, I should like to make a statement on the implementation of the child support reforms.
	As the House knows, the Government are reforming the child support system to ensure that more children benefit from regular maintenance. That will get support more effectively to parents with care and their children, help non-resident parents meet their responsibilities and tackle child poverty.
	The new scheme will be more transparent and easier for parents to understand. It will also be easier for the agency to calculate maintenance and enforce payment so that children have the support that they need. It will be based on a simple rate so that non-resident parents will know in advance how much maintenance they must pay. For example, non-resident parents with net incomes of £200 to £2,000 a week will be expected to make payments—based on 15 per cent. for one child, 20 per cent. for two and 25 per cent. for three or more—from their net weekly income; that is, after tax, national insurance and pension contributions, and after the same percentage allowance for any children in their new family.
	For non-resident parents with net incomes of less than £100 a week and those receiving income support and jobseeker's allowance, child maintenance will be set at a flat rate of £5 a week. For those with incomes of between £100 and £200 a week, there will be a sliding scale. There will be specific provisions for cases where the care of children is shared.
	The introduction of the child maintenance premium will mean that for the first time parents with care receiving income support or income-based jobseeker's allowance who are on the new scheme can keep up to £10 a week of any maintenance paid for their children. That will give them a real stake in making child support work.
	The changes we have brought in since 1997 will help, too. The Child Support Agency is more customer focused. Levels of compliance have increased; the agency now collects over £200 million more each year in child maintenance than it did five years ago. The number of complaints is well down; for example, those referred to the chief executive by Members of the House have fallen 28 per cent. over the past three years.
	Last March, my predecessor, now the Secretary of State for Transport, announced that the introduction of the new scheme would be delayed until the Government were confident that the new information technology worked effectively. That was the right decision and was generally welcomed on both sides of the House, as well as by voluntary groups.
	Last September, I wrote to all Members updating them on progress. I said that testing of the computer system had been progressing satisfactorily over the summer so that we were in a position to pilot the new IT for some cases on existing rules. Those pilot arrangements have worked well and are operating across the country. Both senior officials and I are now satisfied, on the basis of the careful and comprehensive testing, that the system will deliver the level of service that our customers have a right to expect.
	I am pleased to tell the House that new cases will be calculated using the new rules from 3 March this year. New cases are those where liability for maintenance begins on or after 3 March. They will come on to the system at a rate of 30,000 a month. I should remind the House that we always planned to introduce the changes in a phased way. We will start in March with new cases, and then convert the existing 1.1 million cases later, when we can see how the arrangements are working.
	However, some existing cases will be brought across to the new scheme earlier than others—primarily those that become linked to a new case. For example, if an application calculated under the new scheme were made by a parent with care in respect of a non-resident parent who was already liable for maintenance in a different case, it would be neither fair nor workable for people to have liability simultaneously under two different schemes, so it is best to move those linked cases on to the new system together. We will, of course, write to existing clients to explain how they will be affected by the changes and to tell them that they need do nothing further until they are contacted by the agency.
	I am satisfied that the IT system will deliver a level of service that is acceptable, but with any new system of this size, even after exhaustive testing, there will be some bugs to be sorted out. We have put in place systems and procedures to deal with that. We are also improving arrangements for responding to inquiries from the public, advice agencies and hon. Members. Tomorrow, I shall write to hon. Members with details of an MP-specific hotline that is already in place in all the agency's business units. The agency will do all that it can to ensure that the new system gives a better service to clients.
	On the financial implications of this announcement, my predecessor told the House in his statement on 20 March last year that there would be additional costs. The system has proved to be more complex than had been originally thought, and we have reached a negotiated agreement with EDS to share those costs, with it meeting its share under the contract. The amount that the Government will pay has risen by about 7 per cent. over the term of the contract. Although any extra cost is unwelcome, an increase on that scale is not at all unusual for a complex project—whether in the public or private sector—and it is justified to deliver this important reform.
	The implementation of the new IT system is the key to bringing in the much-needed new child support scheme, with its better, fairer and simpler system for calculating maintenance. It will help us to target resources to make sure that more maintenance is actually paid, getting more money to children more quickly. That is the right policy. I believe that the decision that we took to delay implementation last March was right, and that it is the right decision to proceed now.

David Willetts: I thank the Secretary of State for his statement. In fact, more than that, I welcome it with some relief after years of delay.
	Will the Secretary of State confirm that the new IT system was originally promised for October 2001; then April 2002; and then, in March last year, it was delayed with no new date fixed at all? Although millions of families have been kept waiting, the latest CSA annual report—in typical new Labour style—claims that it has already delivered the change agenda. It says, "target achieved", with one of those ticks in the box as well.
	Will the Secretary of State tell the House about the reasons for that delay? We need to know, not least because it is very relevant to the bill for the delay. EDS says that the problem is that Ministers kept interfering in the details of the system. Ministers may, understandably, have a different version of events, but we know from the Secretary of State's statement that the Government will now pay more as a result of that delay. That implies that they accept some responsibility for what has happened. The Secretary of State did not tell the House how much more they will have to pay. We are talking about a project valued at hundreds of millions of pounds, with very significant cost over-runs. How much of that cost will be borne by the taxpayer? The House is entitled to know.
	There are 1.5 million children in families covered by the CSA. We all know the problems of the CSA, which have been brought to the surgeries of all Members of the House. Can the Secretary of State give the House any more information about the handling of existing cases? More than 1 million families are still in the dark after today's announcement. When will they be moved on to the new IT system and the new formula? One Minister said in a Committee that it would take a year; another said that it would take five years. What is the Secretary of State's estimate, which will enable existing cases to know where they stand?
	The Department has several major projects on its hands. The Secretary of State is introducing a new system for paying benefits in the spring, the national rollout of Jobcentre Plus, the new pensions service, the new pension credit in the autumn, and all the Chancellor's pet tax credits, which are also being changed. [Hon. Members: "Hear, hear."] I am pleased that Labour Members welcome all those changes, and I hope—especially if they have welcomed them—that they, like me, will seek an assurance from the Secretary of State that they are all on time, on budget and deliverable. Surely the lesson from the disaster with the IT project for the CSA is that the Government have significant problems delivering all these changes. Will the Secretary of State learn lessons from that sorry episode and apply them to the other big projects piling up in his Department? Millions of families will face uncertainty and delay unless he can guarantee to the House that the projects will be delivered on time and on budget.

Andrew Smith: I thank the hon. Member for Havant (Mr. Willetts) for his welcome—lukewarm though it was. I confirm the timetable. As my predecessor said on 20 March last year, it was right to delay, rather than rushing in an incomplete and unready system. I thought that that was generally understood on both sides of the House. Let us remember why we must modernise and improve the child support system: the Conservatives rushed it in 10 years ago. They had the benefit of good will on both sides of the House. I think that they now accept that the system collapsed under its own weight, as it was overly complex, and the IT was not ready. That is why we have had to put in place these reforms.
	The hon. Gentleman asked whether additional cost had come about because policy had changed. The policy has not changed. As he knows, the basic features of the system are as set out in the 1999 White Paper. The reason that additional costs were incurred was that the project, including the interfaces with the legacy systems that we inherited—IT systems that were designed, for the most part, in the 1970s and built in the 1980s—was much more complex and required a lot more work than was originally envisaged.
	The hon. Gentleman asked about the extent of the extra expenditure. I said that it was 7 per cent. more across the life of the project. The total cost of the project, across its life, goes from some £427 million to £456 million. He asked, too, about the handling of existing cases. The staff who have been employed have been striving to make the unsatisfactory existing system work as well as they can. As I said, the level of complaints has gone down. In terms of compliance, case compliance has been running at 71 per cent. and cash compliance at 68 per cent., which contrasts with the figures when the Conservative party was in charge and struggled to get compliance running at above 50 per cent. Everybody accepts that there are limits to what one can do with the old system that the Conservatives introduced. It needs replacing, and it is right to proceed as we are doing.
	The hon. Gentleman asked about the changeover of existing cases. As I said in my statement, we will reach a decision on that, sensibly, once we can see how the new system is working out in practice.
	The hon. Gentleman asked about the lessons to be learned. There are lessons to be learned from this and indeed other major IT projects across the years. Principal among them is the need to give even closer thought to the specification and management arrangements when the contract is originally concluded. Thanks to the work that the Office of Government Commerce is doing, and the gate procedure that is now in place on all major projects, those lessons are being learned and applied. Perhaps the most important lesson is not to inherit a system that does not work from a Government who did not work for families or for children.

Paul Holmes: I thank the Secretary of State for giving advance sight of his statement.
	The Liberal Democrats would have preferred to hear today that the Government were adopting our proposals to pass all the administration of child support over to the Inland Revenue, which already administers child benefit, will administer child tax credit and already has the names, addresses and tax records of everyone with children.
	However, given that the Minister is now going ahead with the long-delayed attempt to streamline the existing system, if the Government and EDS are sharing the extra costs of the 18-month delay, does that mean that both were at fault in the delay?
	Is it true that the appeals service is budgeting for up to a million new complaints as a result of the new system, as one internal newsletter suggests? When existing cases are eventually switched to the new system, is it still the Government's intention to switch them all at once, on the same day? If so, will the new computer system cope? Constituents who see friends on the new system will be asking us when they will be switched to it. What should we tell them?
	Finally, can the Minister clarify why the new scheme starts on 3 March rather than 5 April, the start of the new financial year? The rhetoric so far has been of streamlining and simplicity, but the fear is that the chaos has only just begun.

Andrew Smith: I thank the hon. Gentleman for his remarks and his welcome, such as it was, for the introduction of the new system.
	The hon. Gentleman asked about levels of compliance and general performance under the new system. I referred to levels of compliance under the existing system: cash compliance at 68 per cent. and case compliance at 71 per cent. With both of those, we expect to achieve 75 per cent. under the new system, so there will be a clear improvement.
	Bringing on to the system all 300,000 recipients of income support who will attract the child support premium is an enormous gain. Taking that with the efficiency improvements in existing cases, we anticipate that some 80 per cent. of parents with care will be better off as a result of the new system.
	The hon. Gentleman also asked about the changeover of existing cases and whether that would be a big bang. We shall have to phase in the changeover of the existing 1.1 million cases. As to the date, I said in response to the hon. Member for Havant that we need to review the progress and working of the new system before setting it. Of course, I understand the attraction, when people see the benefits of the new system, of wanting to do that as soon as possible, but it makes sense with any big IT rollout to do it only when one knows that the system is working properly. That is what we shall do.
	The hon. Gentleman asked why the date was 3 March rather than some time in April. This represents a big step forward, a big improvement for parents with care and a fairer system for non-resident parents as well. Other things being equal, the sooner it is introduced, the better. I am sure that if I were announcing it for April, the hon. Gentleman would be asking why it was not for March.

Terry Rooney: I remind my right hon. Friend that the original child support legislation required three further pieces of primary legislation. The computer system that was put in to operate it has now suffered more than 1,000 days when it has been either partially or totally shut down. The Opposition should bear that in mind.
	I return to the child maintenance premium. Had we been on the original timetable, many single parents would have been receiving it from this April. The delay is not their fault. Is there any possibility of bringing that in before transferring existing cases to the new system, so that those children are lifted somewhat out of the poverty that they are in?

Andrew Smith: I thank my hon. Friend, who takes a close interest in these matters, for his pertinent reminders of the sheer chaos in the original child support system. We have had to tackle that and introduce reforms steadily to improve it before changing to the new system.
	I understand the case that my hon. Friend makes on the child maintenance premium. I assure him that we considered the matter very carefully, but had we sought, before existing cases switched to the new IT system, to link those receiving maintenance with the child maintenance premium, that would have added another layer of complexity to a very demanding IT delivery programme. As I said, we are trying to manage and reduce the risks associated with that, so that we can deliver to an acceptable standard, and therefore decided, perhaps unfortunately, that it was not possible to make that link.

Andrew Mitchell: While the Secretary of State's announcement is good news, in that the technology has at last caught up with the will of Parliament, may I remind him that these changes, with a simpler formula, are not in themselves a panacea because there will be a significant increase in the element of rough justice that results? I urge him and his colleagues to understand the need to be robust in facing down those who will seek an excuse not to pay their maintenance when society rightly expects them to do so.

Andrew Smith: The answer is yes. I welcome the hon. Gentleman's remarks, which are all the more striking because of his previous responsibilities in this area. Although there is an element of rough justice in the greater simplicity, people can at least see where they stand and understand the basis on which the assessment is made. Sadly, that is not true of the vast majority of cases under the old system.
	As the hon. Gentleman said, we need to be robust, and we certainly shall be. One of the advantages of the change is that it will release staff resources to focus on enforcement rather than on assessment and reassessment. I shall be pleased to pray the hon. Gentleman in aid when we need to be robust.

Angela Eagle: Does my right hon. Friend agree that we do not need to take lessons from the Conservative party, which bought from America an off-the-shelf computer that does not even recognise British national insurance numbers? I welcome the fact that we can now replace that and run a much simpler system. Will my right hon. Friend say a little more about how the simplified system will enable staff to spend more time chasing the approximately 30 per cent. of non-resident parents who currently pay nothing?

Andrew Smith: Yes, indeed. My hon. Friend is right; I believe that the current system came from Florida, where they produce such good voting machines. My hon. Friend is right to point to the improved capacity that we will have to chase those who pay nothing. That is in addition to the advantages to the child maintenance premium, which, in benefit and payment terms, will provide an incentive where there is none—apart from the child bonus—for families on income support and jobseeker's allowance.
	We now have an opportunity to increase the level of payment and, more generally, to reinforce, where appropriate, the importance of non-resident parents meeting their responsibilities and having contact with their children. I hope that because the new system makes it easier to address financial issues, it will do rather less to sour relations between parents with care and non-resident parents.

Gary Streeter: For some years now, the CSA has been adept at collecting straightforward amounts of maintenance from people on PAYE—fathers, generally speaking—so that their children are properly maintained. What in the new system will help the CSA to collect money from people in small businesses and those whose financial circumstances are complex or opaque? Let us face it: the CSA has not been good at collecting money from such people, and children all over the country are being short-changed. Will the Secretary of State assure us that the new system will help the CSA to perform that task?

Andrew Smith: Yes, it will. It is simpler and more straightforward, and there is not the same scope for the endless special pleading that is almost designed into the existing system, with the 100-plus pieces of information that may be relevant to an assessment. In addition, as I have said, it will release staff resources for a more dedicated enforcement effort. We collaborate closely with the Inland Revenue and we will have access to its records, which should help with the problem of the self-employed that the hon. Gentleman identified.

Frank Field: May I commiserate with the Secretary of Secretary, because once the Government decided not to base the reform on a simple tax rate he was presented with a reform that would be difficult to deliver? So may I congratulate him on extending way into the distance the date on which we bring existing claimants on to the new active register? Does he accept, however, that given that the reform was announced in 2000, many of our constituents feel a sense of grievance about the level at which they pay maintenance? Will he help them to sue EDS for compensation for the further delay of what is a necessary reform?

Andrew Smith: I thank my right hon. Friend for his congratulations and commiserations. I am sorry to say, however, that I cannot support his plea for money to sue EDS. As I said, we have a long-term partnership for delivery with EDS. I am satisfied that the system will work. We have reached an agreement with it on how the costs are to be shared. That has both incentivised levels of performance and secured the best deal for the taxpayer achievable in the circumstances.

Angela Browning: While the Secretary of State makes the changes, will he take another look at the procedures for attachment of earnings orders? I am worried that the CSA is not rigorous enough in ensuring that employers pay regularly when it has made an order, because the liability remains with the parent whose wages are being deducted. If a company goes broke after making no payments to the CSA for weeks the parent with responsibility is still required to pick up the tab.

Andrew Smith: I should be pleased to look into any cases that the hon. Lady draws to my attention and will raise with officials the issue that she poses. It is important in operating the new system that attachment of earnings and so on are enforced in a way that is business friendly. However, we must also respect client privacy. For example, arrangements will be made for clients to be rung at home rather than at work; we are learning from past mistakes.

Rob Marris: Since the Minister first mooted changes to the 10, 15, 25 per cent. and so on, he has published a Green Paper on pension reform. I notice that the percentages refer to net income, including pension contributions. The Green Paper sets out a lifetime savings in pensions of £1.4 million. Will he assure me that, to use his word, "robust" action will be taken to stop recalcitrant non-resident parents boosting their pension contributions, thereby depressing the amount that they should pay for their children?

Andrew Smith: The system is simple and straightforward. My hon. Friend invites me to add complexities and bureaucratic regulation to it. I am sure that similar invitations will be made along the way. I understand his point, but we will best get money to parents with care and the children who need it by keeping the system simple.

Alistair Burt: As one who bears as many ministerial scars as many others do in relation to the Child Support Agency, I simply say that although we are all equally vociferous and critical of our relative roles in making the agency work, we should never forget that collectively as a House it was our failure to keep our eye on the ball as the legislation was passed that caused many of the difficulties that both Governments have sought to repair.
	Will the right hon. Gentleman do his best to look at two issues that remain at the core of concerns? The first is the repeated messages issued by the Child Support Agency bearing erroneous figures that people are asked to accept and the frequent changes that it makes to those figures. If the new system does something about that, it will be greatly welcomed. Secondly, on the phase-in, I urge the Secretary of State to remember that people feel a sense of injustice if they know that they will pay less in future, yet are forced to pay more for a lengthy period of time. Will he do his best to make sure that the phase-in period is as tight as possible?

Andrew Smith: Yes, the new system, as I said, is much simpler, so it should dramatically cut the errors that, we recall, were made when the CSA started nearly 10 years ago. We all remember people coming to our advice surgeries clutching half a dozen envelopes that they had received in a fortnight all giving different assessments based on different criteria. That has been getting better, as I said, but to operate effectively the system must be kept simple, which is why we have cut dramatically the 100-plus variables that were previously part of the calculation.
	As for the feelings of resentment or frustration that people may experience because the new system will operate on a more favourable basis, that is why, along with the merits of everybody knowing where they stand and being treated consistently, and all recipients of income support and jobseeker's allowance getting the child premium, it makes sense to move to C-day—conversion day—as quickly as possible. Just as it would have been wrong to rush the initial move to the new system until the IT was right, I shall not speculate about a date until I know when we can deliver.

Bill O'Brien: The new transparent and fair system is welcome, but we must have regard for the fact that, under the old system, a third of children did not receive the maintenance to which they were entitled and that both parents are responsible for paying maintenance. Will my right hon. Friend act to ensure that children who are being denied maintenance receive urgent consideration by the Child Support Agency to ensure that they receive their entitlement? The CSA was guilty of maladministration under the old system, so will he agree to an appeals procedure to determine the level of compensation to be paid by the CSA when maladministration has occurred?

Andrew Smith: I thank my hon. Friend for his welcome, and am pleased to confirm that, of course, we will step up action so that payment is made to parents with care who are not currently receiving it. I shall look at his point about compensation, but I think that there are established procedures on the levels of compensation arising from ombudsman cases. As for reminding people of the importance of meeting their child support obligations, despite the banter between parties about the history of the CSA, there is a unity of purpose in the House. It would be good if a united message could go out from the Chamber that we all believe that both parents need fully to meet their responsibilities for their children, whether financial or otherwise.

Julie Kirkbride: The Minister will be all too aware of many absent parents' sensitivity about child support payments. Members have said that among our constituents who will pay less under the new scheme than they do at present there will be a tremendous urge to be transferred to the new system of payment. Will the right hon. Gentleman help the House a little by giving a possible time scale and say what is the earliest date for the transfer of existing payments? With reference to a previous question, can he explain how he will begin to transfer those people to the new system? Will the phasing-in be based on an alphabetical, regional or other system?

Andrew Smith: I am afraid that I cannot offer the hon. Lady much comfort. For reasons that I have given, I shall not be tempted to speculate about dates without knowing how the new arrangements are working. She says that those who look forward to paying less will welcome an early move, but there is another side to the equation: those who receive more now than they will in future might not look forward to the move quite as much.
	As a result of the sometimes significant shifts that can be involved, we shall phase in changed assessments, which could take more than five years, so that people do not face too sharp an increase or fall in the sum they are paying. I will set out the basis on which the conversion of cases will take place when we are ready to do so. I am not in a position to do so at the moment.

Ann Cryer: May I seek further assurances on whether the changes will have any bearing on the many self-employed, non-resident parents who seem to get away with paying very little towards their children's upkeep despite a fairly affluent lifestyle?

Andrew Smith: Yes, indeed. As I have said, as a consequence of the simplicity and greater efficiency of the new system, we shall be able to devote more resources precisely to that. Moreover, it will be possible for a parent with care who believes that the lifestyle enjoyed by the non-resident parent is inconsistent with the income declared to draw that to the CSA's attention. If parents with care are still dissatisfied, they are ultimately able to take the matter to appeal at a tribunal.

Chris Grayling: May I amplify the points about not only companies but all aspects of self-employment? I have examples in my constituency of people managing to hide the true extent of their earnings by clever accounting through partnerships or companies. The fixed formulas described by the Minister may not necessarily help such cases. How will the CSA deal with those who hide their true earnings through self-employment, and how will it manage to extract the information when it appears to have no clear responsibility for taking draconian action to find out what people really earn today?

Andrew Smith: We will collaborate closely with the Inland Revenue on these matters. It has had the task on occasions of identifying the true level of income or profit that people earn. We will pursue that closer collaboration and will act on the information available. We shall also pursue liabilities and accrued debts that much more vigorously because our staff will not have to spend so much more time perpetually assessing and reassessing cases as a result of circumstances never catching up with the string of appeals and procedural devices exploited by those who want to put off payments. I am sure that some will try to hide their true income and so on, but it will be progressively harder for them to get away with that.

Nick Palmer: I very much welcome the Secretary of State's announcement. As someone who has introduced quite a few IT systems, I am aware that the prediction of completion dates is more an art than a science. We should simply accept that as a fact. Will he advise the House, however, on the precise implications of his assertion that about 30,000 cases a month will be brought into the system? How does that compare with the number of new cases that arise? Does the figure represent the capacity of the system—in other words, when we start to deal with new cases, it will take about 30 months to transfer 900,000 cases? Will he elaborate a little on that?

Andrew Smith: The 30,000 figure is the flow of new cases into the CSA. It is not constrained by the ability of the system to cope with them; it is the number that the system has to be able to cope with. It will be added to, as I explained, as more and more linked cases come on stream.

Simon Thomas: Will the Minister give some reassurance on enforcement, especially of current cases? My constituent, Mrs. Gowman, is owed £50,000 by her ex-husband, Mr. Bruce, because the agency sat on her enforcement and took no action for 15 months. Will the Minister assure my constituents and others that agency staff will not use the introduction of the new system to take their eyes off the ball on current enforcement cases, and that enforcement will be considerably improved?

Andrew Smith: Current enforcement cases will also benefit from the ability of staff to concentrate more on collecting existing liabilities and debts. For reasons that the hon. Gentleman will understand, I cannot discuss an individual case on the Floor of the House, although I shall be happy to look into it if he sends me details.

Paul Tyler: The Secretary of State laid great stress, rightly, on levels of compliance. Will he give a precise figure for the level of compliance among self-employed non-resident parents? He has already answered a number of questions from Members who are clearly worried about the level of it. If we are to measure the extent of the existing problem with this category of parents, and to measure any improvements under the new system, which he is confident will be achieved, we need that figure.

Andrew Smith: I think I can remember the figure, but I am not certain, so I shall let the hon. Gentleman know what it is. His question is perfectly reasonable. The figure will be well short of the 68 per cent. for cash compliance and 71 per cent. for case compliance, on average. I will let him and the House have the figure, so that we can assess progress against it.

Tony McWalter: I congratulate my right hon. Friend on the statement today and on loosening the Gordian knot that was left to him by the Opposition. Compliance is essential. My former constituent, Mr. Barr, has been evading his responsibilities for 10 years. The Department has thrown the book at Mr. Barr and tried to seize his house and everything else, but still failed. Our noble Friend Baroness Hollis, who is sitting not a million miles away, has tried extremely hard to try to solve the case, but as long as self-employed people with large private pension schemes can get away with violating their obligations, the entire system is brought into disrepute. Will my right hon. Friend assure us that compliance will be dealt with properly at last?

Andrew Smith: Yes, I am determined that that should be done. For the reasons that my hon. Friend and others have pointed out, it is crucial both to confidence in the system and to people's basic sense of fairness that self-employed people, like employed people, meet their responsibilities.
	I now have the figure that the hon. Member for North Cornwall (Mr. Tyler) asked for. The compliance rate for self-employed people is 34 per cent.—as I said, well short of the average.

Angela Watkinson: What can be done under the new IT system to check the accuracy of the information provided not just by the non-resident parent, but by the caring parent, to avoid the sort of injustices about which we have heard—overtly successful business people who are able to produce books that show that the business is not in profit, and at the other extreme, people such as a postman in my constituency, who is paying CSA payments for one child which represent 33 per cent. of his gross income and 50 per cent. of his net income? Clearly, both cases are unjust.

Andrew Smith: Yes, indeed. That is why the new formula is so much fairer, as well as being so much more straightforward, and why it was widely supported in the extensive consultation. Just about the only information that parents with care have to supply is how many children they have and whether they are on benefit. The only other factors that it might be material to take into account is whether, for example, the non-resident parent is contributing towards the costs of accommodation or education. There is provision in the new system to take that into account.

Desmond Swayne: Members of Parliament will have an increased case load of complaints consequent upon the very simplicity to which the Secretary of State has drawn attention, as a result of the fact that the new system takes into account far fewer individual circumstances. The pay-off will be the increased number of payers who are not paying now. What targets has the Secretary of State set for that?

Andrew Smith: The target for compliance, both for cases and for cash, is to be 75 per cent. I agree with the hon. Gentleman. The pay-off is money getting to the parents with care and the children who need it, and what the system does more generally to reinforce people honouring their responsibilities as parents, whether as parents with care or as non-resident parents. The hon. Gentleman points to more complaints. Putting the new cases on the system will result in some complaints—we would get complaints about the introduction of any system—but by and large, given that for many people their payments will be less and the new system will be more straightforward, I should have thought that they would welcome it. What we must prepare for and explain carefully is conversion of the existing cases. However, as I said, with regard to MPs receiving more inquiries from constituents, I shall remind them tomorrow of the dedicated helpline that they and their staff can access.

David Cairns: I am very grateful for the reminder about the helpline.
	One of the things that will prevent the CSA from working full-time on calculating compliance will undoubtedly be its having to answer the many thousands of calls that it will receive from those in existing cases, who have, understandably, been left none the wiser following my right hon. Friend's statement. Do we not owe it to those people, who have been long suffering and patient, to contact them directly and explain what we are trying to do, be honest about what has gone wrong and express our firm commitment to move them on to the new system as soon as the computer will allow us to do so?

Andrew Smith: My hon. Friend makes a very good point; for the reason that he gives, we shall write to those in all existing cases, explaining exactly what is going on.

Andrew Selous: The Secretary of State will know that all of us in the House would want payments by non-resident parents to be both fair and reasonable, but as a third of non-resident parents are not making any payments at all, the question of enforcement is on the minds of my constituents who are parents with care responsibilities. On the sanctions that it is open to him to use, where no payment is made both persistently and wilfully on the part of the non-resident parent and no attempt is made to establish contact with the children, what further steps will his Department take to remove driving licences? He already has that power. How many driving licences have been taken away, and does he plan to increase the number under the reforms?

Andrew Smith: The penalties have been increased. I shall certainly keep a very close eye on the matter to see whether we need to strengthen them still further. On the withdrawal of driving licences, the fact that it is being drawn to people's attention and that such a threat is hanging above them works all the more effectively when the licence is not removed; they cough up the money that they owe.

Point of Order

Gerald Howarth: On a point of order, Mr. Deputy Speaker. I am sure that you and many hon. Members will have seen in the weekend press extensive coverage on the Government's imminent announcement about the contract that is to be placed for two new aircraft carriers. As you know, the order in which questions for oral answer appear on the Order Paper is not a precise science. Of course, I do not accuse you of having any involvement in the matter, which is decided by random selection. However, amidst many questions about Iraq today, there was one about procurement, and it is most unfortunate that it was withdrawn even as proceedings here were under way. I cast no aspersions on the hon. Member for Glasgow, Pollok (Mr. Davidson), whose question was withdrawn; it may be that he was caught on the train, or whatever. None the less, will you do two things for me? First, will you make inquiries to ensure that no pressure was brought to bear—

David Cairns: Have you met him?

Gerald Howarth: I have to say that I think that it is most unlikely; I regard the hon. Member for Glasgow, Pollok as a friend and he is a very fine man.
	Given the controversy about the contract, I hope that no pressure was brought to bear on the hon. Gentleman, although I think it unlikely; otherwise, Mr. Deputy Speaker, will you make it clear to hon. Members that, if they can give the House as much notice as possible, it is a courtesy to the House that makes the planning of such questions rather easier? For the benefit of those who sit elsewhere in the Chamber, I hope that we can put it on record that the reason why the House was unable to discuss the issue is that there was no opportunity to do so.

Mr. Deputy Speaker: I am not sure that I am in a position to rule on pressure—or non-pressure—that is brought to bear on hon. Members. However, I appreciate that it is unfair for many reasons when questions are withdrawn in the way in which the hon. Member for Aldershot (Mr. Howarth) described. He has put his point firmly on the record.
	Orders of the Day

Electricity (Miscellaneous Provisions) Bill

Order for Second Reading read.

William Cash: On a point of order, Mr. Deputy Speaker. The Bill contains provisions that merit further investigation. Erskine May and Standing Orders explicitly state that public Bills to which the Standing Orders relating to private business apply are subject to certain proceedings that are additional to the normal stages in passing public Bills.
	Indeed, the Speaker has defined a hybrid Bill as
	"a public Bill that affects a particular private interest in a manner different from the private interests of other persons or bodies of the same category or class."
	My experience on the Aircraft and Shipbuilding Industries Act 1977, when I had the pleasure of being the legal adviser to the ship repairers, showed that it was not obvious that the Bill was hybrid. It required a great deal of analysis, which must also take place in this instance. I simply draw attention to the fact that Erskine May says that if, on examination, it appears to the Public Bill Office that Standing Orders relating to private business may apply to a public Bill, it does not necessarily mean that matters will be got right first time. We therefore give notice that we wish, with the leave of the House, to have the matter examined in further detail.

Mr. Deputy Speaker: I thank the hon. Gentleman for giving prior notice of his point of order. Mr. Speaker has given the matter careful consideration, but he does not find the Electricity (Miscellaneous Provisions) Bill to be hybrid in any respect. The Bill is an enabling measure that gives the Secretary of State authority to incur expenditure on British Energy, a private sector group that is engaged in nuclear generation, or to acquire a British Energy undertaking. However, it does not require her to do so. The nuclear generating industry to which the Bill applies is a specific class for the purpose of legislation. The other member of the class is British Nuclear Fuels Ltd., a wholly publicly owned company, which is not adversely affected by the provisions of the Bill.
	In reaching his conclusion that the Bill is not hybrid, Mr. Speaker has examined the precedents for such Government action under the Rolls-Royce (Purchase) Act 1971, the British Leyland Act 1975 and the Port of London (Financial Assistance) Act 1980.

Brian Wilson: I beg to move, That the Bill be now read a Second time.
	Before we even begin our consideration, we have a fascinating vignette in which the hon. Member for Stone (Mr. Cash) reveals himself 27 years later as the man behind Maxwell-Hyslop.
	The Secretary of State came to the House on 28 November last year to make an announcement on British Energy. That company is Britain's only private sector nuclear generator and our largest single electricity generator. It was in serious financial difficulty, and the Government had provided it with a loan facility since early September to enable it to continue to operate.
	British Energy proposed a restructuring plan to return the company to financial viability in the private sector. That was a complex deal, which required the participation of several financial stakeholders. The Government were prepared to play their part in the restructuring by providing financial support for BE's nuclear liabilities. They were prepared to underwrite BE's enhanced arrangements for decommissioning and contribute significantly to the historic spent nuclear fuel liabilities.
	However, we were always conscious of the risk that BE would not be able to deliver the deal. It was therefore important that Government were alert to the alternative scenario of the possible failure of the deal and fully prepared for the company to go into administration.
	In her statement, the Secretary of State made clear her intention to introduce legislation that would tackle either eventuality: successful restructuring or administration. That is the purpose of the Bill. I want to re-emphasise that throughout our dealings with British Energy our key objectives have been nuclear safety and the security of electricity supplies. It might be helpful if I explain that a little further.

Andrew Lansley: Will the Minister give way?

Brian Wilson: I want to make a little progress.
	As hon. Members will be aware, an unplanned business failure of British Energy could have jeopardised those objectives. Nuclear reactors, self-evidently, have their own special safety requirements. One cannot simply shut down a reactor and walk away if one runs out of money. For example, for as long as fuel remains inside, the cooling and safety systems must be operated, and funding is required to ensure that that is possible. Likewise, if BE stations were suddenly forced to stop generating electricity with little advance warning, there would be serious consequences for the security of electricity supplies.

Andrew Lansley: The Minister will recall that as recently as early December he was saying that the energy White Paper would be published early in the new year. Will he concede that, notwithstanding the urgency of the Bill, it would be far better if we had sight of the Government's more general proposals for energy in the White Paper? Can the Minister explain why it has not been published so as to enable the debate to take place in that context?

Brian Wilson: We had this little exchange during trade and industry questions last month. I do not know why the Tories are so worried about timing—it is not as if they are going anywhere. I said that it would be published early in the new year, and it will be. We had a discussion on Report, in relation to academic institutes, about what was meant by early in the new year.

Andrew Robathan: By Hogmanay?

Brian Wilson: Hogmanay was late that year. The White Paper will be published at the end of February or the beginning of March—I will not put a precise date on it. Everybody with an interest in these subjects agrees that it is better to get it right than to be pinned down to a specific date. Elements of the British Energy issue also have an impact on the timetable.

Nick Palmer: There is a pretty general consensus that this contingency legislation is needed, but there has been speculation that it indicates the Government's preference for rejecting some of the performance and innovation unit's recommendations and introducing new nuclear power stations. Will the Minister confirm that the Bill is without any prejudice towards that end and that the Government recognise that such a policy would face widespread opposition?

Brian Wilson: I congratulate my hon. Friend on getting in early, but I do not recognise the validity of his comments. No such conclusion or interpretation could be extrapolated from what I am about to say.
	I return to the Government's policy objective in relation to the Bill and to our dealings with British Energy. It is essential, first, to guarantee nuclear safety and, secondly, to maintain the security of electricity supplies. Failure to act as we did would have jeopardised those two objectives, which remain vital and will continue to be our priorities. As we move forward, we also need to factor in longer-term considerations, especially how to deal with those of British Energy's nuclear liabilities that already exist as a result of previous stations' operations. It is vital that they are dealt with safely and effectively, but we must consider how to do that at the least cost to the taxpayer while ensuring that electricity generation from those stations contributes as much as possible to the nation's needs. All that applies irrespective of whether the restructuring succeeds or fails.

Simon Thomas: The Minister mentioned security of supply, which is one of the two main reasons underpinning the Government's actions in this regard. Does he not accept that the Office of Gas and Electricity Markets has estimated that over-supply in the UK electricity market is about 22 per cent., which is precisely the figure that British Energy supplies to the electricity market? The security of supply issue cannot be addressed through British Energy alone and he is, at very best, taking a short-term approach in the Bill.

Brian Wilson: I shall not quibble over the hon. Gentleman's figures, but if there is 22 per cent. overcapacity and 22 per cent. is taken out, that will leave us without much margin. That seems to be a pretty fundamental arithmetic calculation. Of course, many issues relate to security of supply, but I would have thought that there is a pretty broad consensus in the House—irrespective of the history, as this is the reality—that we get about 22 per cent. of capacity from nuclear. Therefore, the idea that we can countenance its withdrawal over a short period, or even the medium term, is not viable.
	I know that there are some in the House who would want all those nuclear stations to be shut down tomorrow. I strongly disagree with that view. For one thing, the sudden shutdown of a nuclear reactor is not a practical option. Reactors take many months to defuel and the infrastructure is not set up to allow all those stations to defuel their reactors at once. In practical terms, it would be many years before that process were complete.
	Beside that practical point, however, there is an equally important argument on the economic rationality of such a move. Those stations more than cover the additional costs of their operation. To put it another way, continuing to run them generates surplus revenue, which can then be put towards paying for the liabilities that are already incurred and cannot now be avoided. Shutting down those stations and forgoing the financial contribution that they could make towards their liabilities would be economic madness, which is doubtless why it commends itself to the Liberal Democrats.
	On 28 November, we identified three key outcomes that the company would have to achieve if the restructuring package were to succeed. The first was that it would need agreement from existing creditors to a temporary freeze on payments and a write-down in the value of what they were owed. The company is engaged in a dialogue with its creditors to achieve that.
	Secondly, it was recognised that the company would need to sell the north American part of its operations. Since the November statement, it has announced that it has successfully entered into a binding agreement to sell Bruce Power in Canada. That will be subject to a shareholder vote on 10 February. The third part of the restructuring package was the implementation of a new trading strategy. The company is negotiating with potential trading partners.
	The negotiations with the various counter-parties to achieve those three outcomes are in the hands of British Energy and are clearly commercially sensitive matters for that company. The House will therefore fully understand that it would not be appropriate in the circumstances for me to be drawn further on those specific matters today.

Mark Hendrick: Given that the emissions trading regime is coming from the European Union, does the Minister believe that British Energy can benefit from that? Will he assure me that generators will not be given an opt-out when the trading regime is introduced?

Brian Wilson: My hon. Friend raises an interesting question. Of course, the emissions trading directive is still being negotiated, but, in its current form, it includes electricity generators from the outset of the scheme. I can certainly say today that the Government have no plans to seek an opt-out for the electricity generators.
	I know that Members are interested in the wider details of the British Energy case, so I hope that that background information and progress update have been helpful. If I may, I shall discuss the specific provisions of the Bill. Perhaps I should say first that successful implementation of the restructuring plan also depends on receiving formal approval of that plan from the European Commission under the state aid rules and provisions on rescuing and restructuring firms in difficulty. We are preparing that plan, which is due to be submitted to the Commission by 9 March.

George Osborne: Does the Minister concede that one burden placed on British Energy has been the climate change levy, which, according to some estimates, has cost the company between £80 million and £100 million? Does he agree that since the levy was designed to reduce the emission of carbon dioxide, it is complete nonsense to apply it to the nuclear industry, which does not produce it?

Brian Wilson: I do not intend to go into wider areas of energy policy. The hon. Gentleman has made his point effectively, and I am sure that it will be noted.

Richard Ottaway: Given the leaks last week to the effect that the Government do not plan a new generation of nuclear generators, if British Energy goes into administration and if the Minister subsequently takes it over, will he seek to prolong the life of existing nuclear generators while the renewables programme gains momentum?

Brian Wilson: The hon. Gentleman has a genuine interest in these matters, but for as long as I have done my present job not a week has gone by in which no one has written nuclear stories saying "yes, no or maybe" about our policy. There is a preoccupation with such stories and I assure the hon. Gentleman that the stories of which he spoke fall into that category.
	It is not for me to say whether the life of existing stations would be prolonged; that will be a regulatory matter at the appropriate time, which is some way down the road for all the stations in the British Energy stable. It will be open to the company to seek to prolong those stations' lives, and that will be an economic decision for the company as well as, clearly, a regulatory decision for the nuclear installations inspectorate and the Health and Safety Executive. There is nothing to preclude such an application.

David Hamilton: Surely the Minister is not saying that if we are bailing the company out to the tune of millions of pounds, we will have no say in whether stations should have an extended life. Surely phasing them out would be the natural way forward.

Brian Wilson: That is not the subject of the Bill. As things stand, the nuclear power stations operated by British Energy have a defined life span. I was responding to the purely hypothetical question of whether it would be open to operators to apply to extend those life spans, as has happened in the past. I merely confirm that that option exists. I know of nothing that could stop it. That does not prejudge the issue in any way, and whatever else that issue may be, it is not a political issue. It has to do, above all, with technical decisions and safety, and it will be judged in those terms at the appropriate time.
	I quibble with the reference made by my hon. Friend the Member for Midlothian (David Hamilton) to millions of pounds being put towards bailing the company out. We are talking today about the precise reasons why what we are doing is being done not in the company's interest, but in the public interest.
	Hon. Members are interested in the wider details of the British Energy case, but having given some general background I want to discuss the specific provisions of the Bill.
	The Bill will ensure that we are properly prepared for the future in relation to British Energy. It authorises expenditure on the company generally, providing specific statutory authority for the support that we are currently giving and for measures that we may need to take in future. It ensures that we can deliver our part of the solvent restructuring deal, should it succeed. On the other hand, it ensures that we will be prepared if the deal should fail and the company go into administration.
	I shall turn to the role of the Bill if the deal succeeds and solvent restructuring is achieved. As part of the deal, the Government have agreed to contribute significantly to British Energy's historic nuclear liabilities. However, British Energy will in turn pay its own way in future. That is an important principle: liabilities that arise from future operations at its stations must be paid for by the company. On top of that, British Energy will make additional contributions to its nuclear liabilities, including £275 million worth of bonds and 65 per cent. of the cash available each year. The more successful the company is, therefore, the more it will contribute.

Joan Ruddock: The Minister speaks of liabilities, one of the most pressing of which is the disposal of nuclear waste. Has he estimated the difference entailed by any move from reprocessing to dry storage, which I believe British Energy supports?

Mr. Deputy Speaker: Order. Before the Minister answers that question, it might be helpful to the House if I said that the provisions of the Bill are very tightly drawn and that we are not debating energy policy in general.

Brian Wilson: My hon. Friend the Member for Lewisham, Deptford (Joan Ruddock) knows very well that waste is the subject of ongoing research, led by the Department for Environment, Food and Rural Affairs. I do not know where British Energy stands now on dry storage. At one time, not long after I came into the House, it certainly supported dry storage, and a number of us were taken to witness the wonders of dry storage in Colorado. British Energy then got a better deal from BNFL and, suddenly, it forgot about dry storage. I do not know if it has come back to the idea of dry storage or not, but clearly the treatment of waste is an important issue. It is essential that we come up with answers, and my hon. Friend's comments on the advantages of dry storage will be noted.
	From the taxpayer's point of view, it is important to emphasise that we have made sure that the more successful the company is, the more it will contribute. For this deal to work, the Government need to make a firm commitment now of the support we are prepared to give BE over future years. In order to enable the Government to give that guarantee, the Bill will remove the existing statutory ceiling on payments for nuclear liabilities under schedule 12 to the Electricity Act 1989, a ceiling that is currently set at £1 billion. Removing the limit recognises that, ultimately, the Government have overriding responsibilities for nuclear safety and environmental protection. If the company could not afford its liabilities and were to fail, the Government therefore would have to step in to ensure that they were dealt with properly.

Robert Smith: Does the Minister have any estimate of how far the figure is likely to go over the current ceiling?

Brian Wilson: There is not a figure because the amount is not predestined to go over any ceiling, but the existence of the current ceiling is not a natural inhibition. Therefore, we have to have room for manoeuvre in all eventualities. However, that certainly does not imply any figure.

Mark Field: Has the Minister been in touch with the Treasury to ensure that, if the ceiling is taken off, the amount concerned is put into the public accounts? If it is to be a liability, it should be a liability with regard to the public accounts.

Brian Wilson: The hon. Gentleman will not be surprised to hear that we are in constant touch with the Treasury on these matters.

Crispin Blunt: Schedule 12 to the 1989 Act, says that the amount
	"shall not exceed £1,000 million or such greater sum, not exceeding £2,500 million, as the Secretary of State may by order specify."
	Is the Minister suggesting that the amount will be more than £2,500 million?

Brian Wilson: No. I was emphasising that it is not inherent in making these changes that there is an expectation that figures will rise above their present levels. We need the flexibility to respond to eventualities; that, indeed, is the whole purpose of the Bill.
	I must emphasise that, under the solvent restructuring plan that the company has presented to its creditors, we are certainly not writing a blank cheque for British Energy's nuclear liabilities. The Government have a duty to the taxpayer to ensure that there is no potential for the commitment that they would be offering to be exploited at the taxpayers' expense, nor should there be any incentive to run the company's stations in a way that might be inefficient for the country as a whole.
	We understand very well the nature of the company's liabilities and we will put appropriate controls in place to safeguard taxpayers' interests and ensure that we only provide the aid necessary to ensure the safe and secure discharge of these liabilities. Changes to decommissioning plans or station operation that would materially increase the nuclear liabilities would need to be authorised by the Government in advance, working in close consultation with the regulators. The planning and contracting of the work necessary to tackle the nuclear liabilities will need to be transparent and provide value for money.
	The company will be required to continue to maintain a high standard of operation of its sites and will be liable for any consequences if its actions fall short of that. The new arrangements will also ensure that, while recognising that the company must be given the space to run its stations commercially, due account is taken of the costs of decommissioning in view of taxpayers' exposure.
	The Bill will also ensure that the commitment to financial support given by the Government for BE's nuclear liabilities would not cause an immediate, massive tax bill for the company; that would undermine the deal, given the company's cash position, and would be an unforeseen revenue windfall. It would be perverse for us to write out an IOU with one hand and then immediately snatch cash back from the company with the other, tipping it into insolvency.
	I want to consider the role of the Bill if the restructuring deal fails. If the deal fails, we expect the board of the company to decide to put it into administration. We anticipate funding the administrator so that we are able to ensure that our key objectives of nuclear safety and security of supply are met. We have been undertaking detailed contingency plans for administration, in discussion with all the key responsible regulatory bodies. Furthermore, we have notified the Chairman of the Public Accounts Committee of the terms of the proposed indemnity that the Government would give the administrator.
	BE's nuclear liabilities and the particular financial risks associated with its nuclear operations put it in a special position, and we are not aware of any credible private sector interest in acquiring BE if it were to end up in administration. The Government must thus plan for the eventuality that a private sector buyer will not be found for all the company's power stations. That is why we are preparing for the possible acquisition of BE's nuclear stations by the Government, either through acquiring the nuclear operating companies directly or through buying the assets and business of those companies.
	The Bill ensures that we are prepared for either approach, giving the Government the financial authority to make such an acquisition and to finance the continued safe and secure operation of the business. Any acquisition would of course be a commercial arrangement with the administrator of the same kind that a private buyer might make; the Bill gives the Government no special powers in that regard.

Paddy Tipping: It is conceivable that the Bill will not have received Royal Assent before the company goes into administration. What plans are there to ensure that the company continues to operate smoothly and satisfactorily in those circumstances?

Brian Wilson: My Department is in constant touch with BE, as indeed are the regulatory bodies, and I can give an absolute assurance that in any eventuality the smooth and safe running of the stations will be maintained; it will be our highest priority. However, my hon. Friend's point emphasises the need to introduce legislation and to progress it as expeditiously as possible—exactly as we are trying to do.
	My focus is on what the Bill would enable in the immediate future, but I also flag up that bringing nuclear stations back into the public sector would not necessarily rule out future collaboration with the private sector in the longer term. I am sure that many hon. Members will already have noticed that the measure will repeal some old provisions relating to the original privatisation of the electricity industry. Those provisions effectively prevent the Government from acquiring shares in certain privatised electricity companies, thus preventing us from owning the BE operating companies that we want in the current circumstances.
	Those provisions may have made sense at the time—to show that the Government had confidence in the privatisation process and that they did not intend to reverse it immediately afterwards. However, such provisions no longer make sense a decade later when the shape of the industry is unrecognisable compared with the immediate post-privatisation period.
	The provisions apply only to the original legal entity formed by the industry restructuring, and not to other companies in the same group. That legal entity may no longer exist; even if it does so, it may no longer own its original assets. The provisions will not apply to any companies that have newly entered the electricity market. If nothing else, they are discriminatory and reflect former conditions and the imperatives of our predecessors in government. They are not an accurate reflection of the industry at present.
	It is true that repealing the provisions could, in theory, permit the Government to acquire shares in certain other electricity companies where we cannot currently do so, but I stress that we have no intention of doing so in relation to other companies. So there is nothing sinister about repealing the provisions wholesale; we simply want to tidy up old, outdated provisions. Indeed, the rest of part 2 of the Electricity Act 1989, which deals with the initial restructuring, appears to be spent, so the Bill will take a power to remove it.
	Hon. Members should not read anything sinister into that. The reason that we are taking that power is simply a practical matter of timing. As a principle, we want to repeal part 2, but, before we go ahead and do that, we want go through and check every provision thoroughly to see whether any of them needs to be retained in any form. We will do that in due course, but, to avoid holding up the pressing issue of dealing with British Energy, we are taking a power to repeal later on.
	I have not tried to address the Government's wider energy policy, since that is not the subject of this debate, as you have pointed out, Mr. Deputy Speaker. I suspect that hon. Members may wish to extend the range of the debate, but I should like to remind them that, as has been said already, there will be a full opportunity to debate the Government's energy policy when the energy White Paper is published in a few weeks' time.
	The White Paper will set out our policy on achieving energy reliability, competitive energy prices, our environmental goals and, indeed, our wider social objectives. Of course there will be a statement to the House when the White Paper is published, but I am mindful of the position of British Energy's financial creditors who are considering the restructuring deal that the company has put before them. There has been speculation about how measures to be announced in the White Paper might impact on British Energy, and I thought that it would be helpful to address that.
	I should like to make it clear therefore that the energy White Paper will not contain measures that are likely, in the Government's view, to have a material impact on the financial position of British Energy. I should perhaps also emphasise that the restructuring proposals put forward by the company were not in any way predicated on future changes through the White Paper, so the statement I have just made does not affect the viability of those proposals.
	British Energy has put forward its restructuring plan, and we wait to see whether it will be able to deliver it. The Government need to be able to play their part in the solvent restructuring if that succeeds, but we need to be equally prepared to act swiftly if it fails and the company goes into administration. The Bill will ensure that we are prepared for either eventuality, and I commend it to the House.

Crispin Blunt: The Minister has attempted in a rather deflated way, compared with his usual parliamentary standards, to present this sow's ear of a Bill as a silk purse.
	I first want to pick up on one of his final remarks: that the energy White Paper will have no financial impact on British Energy. That indicates that the Government will not produce any proposal that will assist those electricity generators that do not contribute to climate change, which is a rather remarkable admission by the Government, but we will wait to see exactly what their proposals are. If there will be no advantage in relation to climate change, the energy White Paper will certainly be a sadly missed opportunity.
	The Minister cannot disguise the fact that the Bill would be rather better named, the Electricity "we do not have a clue" Bill. The Executive have come to Parliament to ask us to write them a blank cheque, so that they can spend and do whatever they like to get them out of the mess that is much of their own creation. I will ask my right hon. and hon. Friends to decline to sign that cheque, and I hope that all other hon. Members who want to defend the interests of the taxpayer and the consumer will join us.

Tom Watson: Does the hon. Gentleman accept any responsibility for part of the mess that British Energy finds itself in now? Does he agree with the comment that appeared in The Guardian that British Energy was one of those
	"businesses where the pitfalls of privatisation stood out in neon lights"?

Crispin Blunt: No, I do not accept any responsibility at all. I was elected to the House in 1997, so I find it rather extraordinary that I should be expected to be responsible. Perhaps I should be responsible for things that happened in the 1920s or 1930s. Just how far back does the hon. Gentleman want me to go? Does he want me to hold him responsible for the activities of the Labour party in the 1980s and its relationship with the Campaign for Nuclear Disarmament? I remind him that the leader of his party was shadow Secretary of State for Energy at about the time that his membership of parliamentary CND somehow lapsed. The hon. Gentleman would do everyone a favour if we made this a contemporary debate rather than an examination of history. I certainly take absolutely no responsibility for the state of affairs that the Government have created.

Martin O'Neill: Does the hon. Gentleman agree that, in large measure, British Energy found itself in difficulties because the pool system was ended? That happened because, when the Conservatives introduced the system, they did not structure it sufficiently well, so the generators were over-charging electricity consumers by vast amounts. The Labour Government sought to change it and introduce the new electricity trading arrangements. The Conservatives got it wrong in the first place, and the Labour Government were protecting consumers, which resulted in part of the difficulties that British Energy faced.

Crispin Blunt: I usually have the utmost respect for the hon. Member for Ochil (Mr. O'Neill), who is Chairman of the Select Committee, but that is an extraordinary set of statements. I happily accept that one of the reasons that British Energy and every other generator of electricity find themselves in difficulty is that a liberalised market is delivering lower prices to consumers. That is one of the aids to assist British manufacturers in comparison to all the other difficulties that this regulating and interfering Government have put in their way. If electricity consumers are enjoying lower prices because of a liberalised market pioneered by the Conservative Government before 1997—a Government whom I did not represent but merely advised—I am happy that the Conservative party should take credit for the benefit to the wider economy.

Richard Ottaway: I do not think that the hon. Member for Ochil (Mr. O'Neill) can be allowed to get away with his remarks scot free. The new electricity trading arrangements were brought in with a target to reduce wholesale electricity prices by 10 per cent. The way in which they were introduced led to an overshoot, and a lowering of prices by about 40 per cent. has led British Energy to be uneconomical. That is the only reason for the mess that it is in today.

Crispin Blunt: My hon. Friend has engaged the hon. Member for Ochil in his own way.
	Even the Minister's rhetoric cannot disguise the scale of the personal disaster that this Bill represents. It is surprising that when the going gets tough for the Government, the Secretary of State for Trade and Industry has apparently got going. Where has she gone? Why must the Minister present this wretched brief to the House alone? It is a touching feature of the Government that in times of difficulty they conspicuously fail to rally to each others' support, and a sad irony that the identified champion of nuclear power within Labour's ranks has had to come to the House today to propose a measure that will probably sound the death-knell for the future prospects of new nuclear power generation within the private sector.
	The future welfare of the Minister's 450 constituents who work at the Hunterston B power station is also at stake. It is ironic that his actions could help to deny the future success of nuclear generation in the private sector. It is also ironic that Labour's former spokesman on citizens' rights and open government is proposing a measure to the House that will obscure completely the true cost of nuclear power. As a result of the Bill, those of us who believe that nuclear power, with its costs and benefits understood, deserves its chance to compete fairly for Britain's future electricity generating capacity will have our position hopelessly undermined. The Minister's rhetoric cannot disguise the fact that the Government's management of energy policy has helped to create this shambles. Nor can he disguise the confusion in his Department that has led to this measure, which will have wretched consequences unless Parliament is prepared to do something about it.
	Anyone who has followed the unfolding story of British Energy will be impressed by the consistent reporting of the panic inside the Minister's department. I am not sure whether "headless chickens" or "rabbits in the headlights" is the most appropriate description, but both serve to give a general idea of the atmosphere in which birth was given to this measure.
	Let us first examine the policy framework in which the Government have made British Energy operate. I cannot find from the Labour Party a single unequivocal statement on nuclear energy for 25 years. On coming into office they confiscated £2.1 billion of the assets of the electricity industry through the windfall tax. Then in 2000 they passed a statutory instrument that uniquely rated nuclear reactors, ensuring a business rate regime that discriminated against nuclear power stations. Then they introduced that peerless instrument, the climate change levy, a bureaucratic and regulatory nightmare that discriminates against manufacturing and that they also applied to nuclear-generated electricity.
	Then there is the Government's role as owners of BNFL. That company is trading technically insolvently to the tune of a billion pounds or three. So the Government's alibi that that company's commercial interests are nothing to do with them would seem somewhat below the expectation that the taxpayer might have of their accepting their responsibilities.

Mark Hendrick: Can the hon. Gentleman tell me how the climate change levy could be applied to nuclear electricity, when it applies to consumption of electricity in the grid, not production?

Crispin Blunt: I wonder where the hon. Gentleman thinks that that electricity was generated.

Mark Hendrick: rose—

Crispin Blunt: I shall not give way to the hon. Gentleman. It is a ludicrous proposition. Perhaps the hon. Gentleman will resume his seat rather than insist on continuing with this point to his own embarrassment.
	Electricity generated by carbon-free sources, of which nuclear is one, is charged to the climate change levy at the point of consumption in exactly the same way as electricity produced from any other source. If the hon. Gentleman has worked out that that discriminates against carbon-free electricity, I hope that he will give the matter a little more attention.
	BNFL, the Government's own company, offered British Energy a deal that first drove it onto the rocks in September and then saw the Secretary of State come to the House on 28 November to explain a wholly new deal from BNFL that was crucial to dragging British Energy off the rocks where BNFL had deposited it two months earlier. That is the Department that comes before us today asking Parliament to give it the authority to do what it likes.

Brian Wilson: I have not sought to stop the hon. Gentleman's flow, but what he has said is absolute rubbish. The difficulties of British Energy on the scale that we now know them to have been came to our attention as a result of it becoming clear that the deal between BNFL, a commercial entity in its own right, and British Energy would not be enough to solve British Energy's problems. What was on the table afterwards from BNFL was exactly what was on the table before. Therefore, it is an extremely unfair aspersion to cast on BNFL that it acted in any way irresponsibly in driving British Energy into the difficulties that arose.

Crispin Blunt: I am grateful to the Minister for that clarification. What he has said is that the deal that BNFL is offering British Energy today is exactly the same deal as it offered British Energy in the run-up to 9 September. I am grateful that he appears to indicate assent. I think that that is what he has said. If it is not the case—and I have no doubt that the Select Committee of the hon. Member for Ochil will look further into this matter—then, of course, the event that put British Energy into the arms of the Government was the failure of the negotiations with BNFL. I accept that there were a vast number of other issues in play as well, but that was what drove it into the arms of the Government to seek a loan. The Minister is on record as having said that; it is not a point in dispute. It is agreed that the failure of those negotiations with BNFL was the point at which British Energy had to seek assistance from the Government. I hope that the Minister will make it clear whether he is saying that the deal in the rescue package and proposal put forward to British Energy with BNFL is identical to the one that was being negotiated on 9 September. That is the crucial issue.

Brian Wilson: I want to be clear about what the hon. Gentleman has said. He used a slightly pejorative phase, saying that BNFL drove British Energy into the arms of the Government. Is he saying, on behalf of the Tory party, that BNFL had an obligation to offer British Energy a deal which would have prevented it from going into the arms of the Government, irrespective of the impact that that would have had on BNFL and, indeed, the taxpayer? If so, that is a remarkable proposition.

Crispin Blunt: The Minister said that BNFL is offering British Energy precisely the same deal as before, and I just want him to tell the House that that is correct. If so, the issue does not arise. But if BNFL, as a Government-owned company, has now offered a different deal as part of the rescue package that the Government are presenting to the House in association with the Bill, that is quite a different question.

Martin O'Neill: This point is not one of party dispute but of knowledge or interpretation of the facts. As I understand it, and it may benefit the House if the hon. Gentleman confirms that this is his understanding, in September we became increasingly aware of the difficulties that British Energy was having. It made several calls on BNFL, and on each occasion it upped the request for a cut in prices. When it came to what most people would have regarded as BNFL's final offer, British Energy said, "We are sorry, but we need even more." At that point BNFL said, "If we offered more, we would be putting ourselves into a difficult financial position and we would be in the arms of the Government." As I understand it—

Mr. Deputy Speaker: Order. I understand that this is an important point and obviously the House is anxious to have it cleared up, but the hon. Gentleman will be seeking to catch my eye later.

Crispin Blunt: BNFL is already in the Government's hands, and that is the point. I, like anyone else who is not on the Government Benches, have not been privy to the negotiations between BNFL and British Energy. The issue is whether the proposed contract between them is materially different from the one that drove British Energy on to the rocks—it was the final wave that washed it ashore—because the Government are the owner of BNFL and can influence its decisions, which have wider ramifications for the taxpayer.

Paddy Tipping: Will the hon. Gentleman give way?

Crispin Blunt: Will the hon. Gentleman let me make a little progress before I give way?
	The Government's rationale for their actions is accompanied by the constant refrain, which was repeated by the Minister this afternoon, that they are acting to secure the electricity supply of the United Kingdom and to ensure its safety. They have said that so often that it is even possible that they have convinced themselves that it is true—a Goebbels-like quality of self-delusion. Any examination of the issues of safety and of security of supply shows those explanations to be nonsense, but of course we heard them again this afternoon and they sound good. One should never underestimate the attraction of what sounds good for this glib and superficial Government.
	British Energy has demolished the Government's explanation. In response to the legal challenge by Greenpeace and Ecotricity that the aid was unlawful, both British Energy and the Government entered a defence, and they contradicted each other. The Government said:
	"The grant of the loan to British Energy was not unlawful given that it had to be granted as a matter of urgent necessity in the face of unacceptable risks to public safety and security of supply."
	British Energy said:
	"The claim herein for judicial review is wholly misconceived since it depends on a false hidden premise which the Claim Form does not even seek to substantiate.
	The premise is that, if the S of S had not extended the Financial Assistance to BE, then the amount of electricity generated by the nuclear generating stations presently in BE's ownership would have been materially reduced and that, if the relief sought herein were granted, the amount of such electricity would be materially reduced, even perhaps through cessation of generation as a result of permanent closure of the stations. That premise is demonstrably false, irrespective of the person or persons in whose ownership and under whose control the stations are operated; and this is true not only of BE's eight nuclear generating stations but also of its non-nuclear station at Eggborough, the output from which is used to enable the output from the nuclear stations to be more profitably marketed. While the Claimants' Additional Material for Claim Form is profuse in its citation of abstract legal propositions, the Claimants appear never to have addressed their minds to the practical application of those propositions to the actual and unusual circumstances of the present case concerning, as it does, nuclear electricity generating facilities".
	So there we have it: British Energy's attested opinion that the Department of Trade and Industry has never addressed its mind to the practical application of its propositions. Tempted as one might be to accept that, I give credit to DTI officials and, indeed, Ministers that that is not the case. The explanation is that the DTI's spin doctors would like us to believe that there is a danger to security of supply, but it is not true. There never has been any danger to security of supply. In administration, with a loan, in Government ownership or, indeed, in any conceivable circumstances, as the Minister repeated in detail, the stations will continue to generate electricity. Relieved of their liability, it is now accepted by the Government that power stations and their staff will continue to generate power and cash, making it nonsensical for anyone to switch them off, even this Government, with their reckless disregard for the taxpayers' interest.
	There is a final nail in the coffin of the security of supply argument. We could switch off all British Energy's contribution to the grid and, on current figures, it could still supply the market on the coldest day of the year. The Minister made it clear that the margin might be a little tight, but there would still be a margin, provided by a combination of power supply through the interconnector to France, demand management and the 10 per cent. margin available by lowering voltage at peak demand. Prices would also rise, but supply would continue. As has been made clear, however, there was never a prospect of Britain being in that dramatic position. The Secretary of State even contributed to rubbishing her own explanation by saying in her statement:
	"but whatever happens, nuclear power stations will continue to generate electricity and will continue to employ staff."
	So if it is economic madness, as the Minister told us, why has it been the basis of the explanation for the Government's actions?
	Let us consider the safety case. Is anyone suggesting that plants would be abandoned by their staff? Is the Minister suggesting that his constituents would walk away from Hunterston or that the on-site arrangements for nuclear installation inspection would suddenly come to an end? No, of course not. The fact that a board of directors in East Kilbride is replaced by an administrator makes no practical difference to the running of any asset. Heysham 2 and Sizewell B are not going to leak or explode because there has been a change of personality in charge of the finances.

Paddy Tipping: Does the hon. Gentleman absolve the board of British Energy from all blame? Did it not spend £500 million on Eggborough? Did it not sell SWALEC when other people were concentrating on the consumer? Did it not pay SWALEC many thousands of pounds in special dividends? Should it not, too, be criticised?

Crispin Blunt: Quite. I could not agree more. The commercial strategy of British Energy has been sadly flawed. The hon. Gentleman mentions SWALEC. British Energy purchased SWALEC for £100 million and sold it for £200 million. On the face of it that might appear a satisfactory arrangement. We need to draw attention to the fact, however, that it bought SWALEC with an obligation to buy power at a highly inflated price from another generator, which appears in its accounts as an onerous contract with a liability of £200 million. The board of British Energy has made numerous mistakes. Indeed, I could go on citing them, but I do not want to make this debate an examination of why British Energy is responsible for its predicament. [Interruption.] I have never said that it was not responsible, but the Government are also responsible and it is my job to hold them to account. It is not my job to hold the board of British Energy to account. I am not a shareholder or bondholder in British Energy. The Government are inviting the taxpayer to take on an unlimited liability and the House to give them unlimited freedom of action in the Bill.

Brian Wilson: May I try to help the hon. Gentleman? Only a few minutes ago, he said that BNFL drove British Energy into the arms of the Government. In light of what he has just said, he may wish to withdraw that comment and accept that it would have been grossly irresponsible of BNFL to have given a blank cheque to British Energy, something that he appeared to endorse a few minutes ago.

Crispin Blunt: That is not the case at all. I was making the point that negotiations with BNFL were the straw that broke the camel's back. That was the final event that drove British Energy to seek a Government loan—that is exactly what the Minister told the Select Committee and is not a matter of dispute.
	As for safety, the only issue that the Government have had to cope with was a bureaucratic one—how to transfer the necessary licence to operate nuclear power stations from British Energy to a potential administrator. It is not as if the Government have not had time to think about the matter. The Minister told the Select Committee that
	"certainly from June or probably earlier through the summer, we were monitoring what was going on at British Energy because clearly the market was an impact on it which could lead to the difficulties which eventually manifested themselves."
	That even had a name in the Department—Project BLUE.

George Foulkes: On a point of order, Mr. Deputy Speaker, in light of what you said earlier, do you believe that there is a remote chance that the Tory spokesman may actually touch on the Bill's provisions?

Mr. Deputy Speaker: If the hon. Gentleman were out of order, I should have told him so.

Crispin Blunt: Thank you, Mr. Deputy Speaker.
	In her statement in November, the Secretary of State said:
	"We have therefore prepared detailed contingency plans for administration, in discussion with all the key . . . regulatory bodies, to ensure that whatever happens, nuclear safety and security of supply will be maintained."—[Official Report, 28 November 2002; Vol. 395, c. 489-90.]
	The Government's overt explanation for their policy and the Bill is therefore demolished in their own words and those of British Energy.

Russell Brown: The hon. Gentleman has placed a heavy emphasis on administration and has talked about management being handed over to the administrator. I do not want to get into a debate about the meaning of administration, but can he tell the House which third party in the wide world would be interested in taking over the running of those sites?

Crispin Blunt: The hon. Gentleman is prejudging the next part of my speech—I shall address that issue shortly.
	There is a new factor in the British Energy drama—no one seems to have considered from 1996 onwards the fact that British Energy could indeed go bust and what, in the circumstances, would happen to its nuclear liabilities. There is a ring-fenced fund for decommissioning which partly addresses those costs, but as the taxpayer is now painfully finding out, there is the large matter of back-end fuel costs, liability for which dwarfs the scale of decommissioning costs. The Government's answer is to attempt a rescue, thus putting off a decision about renationalisation or administration. We believe that that is the wrong strategy. If the Government are trying to operate in the taxpayer's interests, they are going about it in an odd way, presumably taking on a £2.1 billion liability and none of the assets. As the Minister explained in response to the hon. Member for Ochil, who wanted to know what the taxpayer got for his £2.1 billion:
	"The taxpayer specifically from that will have the peace of mind of the safe management of nuclear liabilities."
	As no one was proposing to manage those liabilities dangerously, that peace of mind may not represent the best value for the taxpayer. It is commonly accepted that in the final analysis the Government cannot escape responsibility for dangerous radioactive waste. The most disturbing feature of the saga for those of us who want nuclear power to have an economic future is that British Energy does not seem to be making adequate provision, if indeed any, for back-end fuel costs. The assumption that that will be funded by future operating profits when the company is in fact making a loss is not one that the insurer of final resort—the taxpayer—will find acceptable. I have been unable to identify anyone who has raised that matter until now. The taxpayer's representatives should have identified that threat at an earlier stage. All of us in the House, whether serving on the Select Committee, the Public Accounts Committee or any other body, should accept that perhaps we are responsible.

Stephen Ladyman: The fund for the decommissioning of nuclear power stations was set up at the time of privatisation with an endowment to start it rolling. It was intended to build up over the lifetime of the power stations until, at the end of their life, it was sufficient to cover the costs. If the House were to take the hon. Gentleman's advice and decline to give the Bill a Second Reading, and British Energy were then to go bust, would not the money that the Government are proposing to loan under the Bill become a grant to cover the cost of decommissioning, which would have to start straight away?

Crispin Blunt: I do not know whether it has escaped the hon. Gentleman's attention, but that is precisely what the Government are proposing anyway. They are proposing to give British Energy between £150 million and £200 million a year, and to merge the decommissioning fund with the fund for back-end nuclear liabilities. The decommissioning fund has been ring-fenced to date, and has had a cash stream of about £20 million a year. Sadly, the fund that the Government are proposing to take over has diminished since the company made its reports. It stood at £411 million in April, but I now understand that it is closer to £300 million. I am afraid that that has more to do with the Government's wider mismanagement of the economy, as I understand that the fund is largely invested in equities. The adage "Sell in May and go away" would have been advice well taken on 1 May 1997. Investors could come back on the election of a Conservative Government.
	This issue must be dealt with in a clear and transparent way. The interests of the taxpayer must be protected, and future investors in nuclear energy need to know how the liabilities will be costed so that they have confidence to invest following this debacle. Without that clarity, or a proper framework for energy policy, there will be no new investment from the private sector. When the Conservative party publishes its energy proposals, it will propose a scheme to address that.
	In the meantime, the Government's cack-handed rescue scheme, which has been cooked up with British Energy, will not deliver such results. Thus, the Bill is not necessary; indeed, it is an obstacle. The Government have so far endorsed British Energy's proposal, but I suspect that they will be somewhat bewildered by the complexity of the financial arrangements proposed.

Simon Thomas: I am listening to the hon. Gentleman's argument with great interest. He has certainly done much to demolish the security of supply argument. However, he has not yet addressed what should have happened in the light of British Energy's fortunes. Surely there are only two options: one is that proposed by the Government; and the other is full renationalisation—the only way to safeguard taxpayers' interests in the company and ensure security of supply for as long as we decide to have nuclear energy. The hon. Gentleman mentioned administration, but has not yet said what that option would entail.

Crispin Blunt: I am getting there, if the hon. Gentleman will allow me.
	The beneficiaries of the Government's rescue scheme are the bondholders and the existing management of the company. Even Robin Jeffrey continues to defend his position, and there are suggestions today that British Energy is being invited to fund the price of his silence in order to prevent him embarrassing the Government. I hope that the Minister will make it clear in his winding-up speech that the Government have nothing to fear from Robin Jeffrey being completely free to speak his mind.

Brian Wilson: Why delay? I say now that I do not think that anybody should be suppressed in that way. If Robin Jeffrey has anything to say, I would be very pleased to hear it, and I think that the public should hear it.

Crispin Blunt: May I say how welcome that statement is? The Minister has made it clear that the Government would deprecate any gagging clause in the terms on which Robin Jeffrey leaves British Energy.
	As for the taxpayer, there is only one factor in favour of the Government's rescue. Had the company gone into administration in September, the Canadian assets—Bruce Power, which was valued at £600 million—would have reverted to the landlord, the Ontario Government. The one significant benefit of the Government's support is that that clause cannot be invoked. Yet, one ludicrous product of the Government's aid to British Energy and the current plan is the deliberate destruction of the value of the north American assets of the company. As a condition of the loan, the Government are forcing British Energy to conduct a fire sale of its north American assets by 14 February as a condition of their support. Assets valued at more than £600 million are to be sold for about £300 million, so the Government have halved the only conceivable value of their actions.
	What about the costs? BNFL, a Government-owned company, has accepted a chunk of British Energy's price risk, which it may or may not have been prepared to do in early September. What will that cost the taxpayer? If bondholders and shareholders accept the deal, it will be because it is in their interest to do so, yet surely the value that they derive can be only at the expense of the taxpayer. If the company had gone into administration, the Government would have been left with the liabilities that they have already accepted explicitly. Those liabilities were always with them implicitly, although as I said, no one seems to have established that.
	However, the administrator would be able to refloat the company on the basis of the cash-generating assets, which have a significant positive value. The taxpayer would have the first charge over receipts from such a sale, and we would have had a nuclear generator—and we can still have a nuclear generator—fully in the private sector, with an opportunity for a transparent and sustainable method of internalising the costs of its environmental pollution. That would have been the best way forward, and it still is. It would be a market solution, and it would be fair to all concerned.

Michael Clapham: Has the hon. Gentleman had a chance to read the Select Committee report of 1996? Did he see the vast size of the liability? The liability at that time for AGRs—advanced gas-cooled reactors—and Sizewell B was £10.5 billion undiscounted, and £7.6 billion discounted at 2 per cent.

Crispin Blunt: I am grateful to the hon. Gentleman. I have not read that report. However, the point that he makes is that the size of the liability was understood. It seems that no one made provision for what would happen if British Energy, as a privatised company, went bankrupt, and what would happen to those liabilities. I will go away and read the Select Committee report in order to establish whether the hon. Gentleman and his colleagues on the Committee were prescient enough to identify the issue at that stage, in which case the then Government should have made clear what would happen in those circumstances. I am happy to accept that. We shall have to wait and see whether that warning was given at the time.
	My hon. Friend the shadow Attorney-General has raised the possibility of hybridity, and the Deputy Speaker has given his ruling on that. If the Bill is not technically hybrid, it would certainly appear to be unfair to other generators of electricity. A significant number of them have made known their concerns.
	We are invited to support a circumscribed and crippled entity that will never have the chance of proving the future worth of nuclear energy. What incentive will there be for effective financial performance if 65 per cent. of its cash has to go to the Government, even after it has paid its taxes, business rate, climate change levy and so on? The beast that the Government are proposing in the Bill will never fly.
	What sort of message do the Bill and the attendant rescue send to the rest of the electricity industry and the market? Its effect on the market is documented. The reaction to the Government's announcement that they proposed to extend their loan to British Energy on 23 September was followed by a drop in the forward price of electricity of 40p to 50p a megawatt-hour. Competitors AES, Powergen, NRG, Ecotricity, American Electric Power and Eastern Electricity are all recorded as expressing concern.
	Government interventions in the market have a price. Future investors will levy a premium on the risk:reward ratio to cover for political risk. The price will be paid by future consumers. If the Government are not prepared to let the market work, we will all pay the price, both as consumers and as taxpayers. Nationalisation is wholly unnecessary.
	We must spare a thought for the employees of British Energy, many of whom have backed their employer by purchasing their own shares in the company. I am very sorry for them. The company's commercial strategy has been at best unlucky and at worst incompetent. It has certainly not been blessed with significant foresight in an increasingly difficult market. What it should also know is that the Government bear a share of responsibility for its plight. There was no framework for nuclear policy, no unequivocal statement about the merits of the industry, a shocking inability to come to timely decisions about policy on future waste disposal, the windfall tax, the climate change levy and disproportionate business rates, all of which combined with a market in considerable surplus.
	We want nuclear power to have a fair chance to play a role in the future electricity generation of the United Kingdom. I want that power to be economic, its environmental costs and benefits having been taken into account in the market. The Bill will not achieve that. It is as sorry a day for the Minister as for the industry, the taxpayer and the consumer. We can do them all a favour and throw the Bill out.

Several hon. Members: rose—

Mr. Deputy Speaker: Order. Before I call the next speaker, I should tell the House that Mr. Speaker has placed a 15-minute limit on all Back-Bench speeches. That applies from now on.

Martin O'Neill: I welcome the Bill and believe that it is prudent of the Government to get the powers that they are seeking.
	Those of us who know British Energy feel sad that it has come to this pass. In its history as a privatised company, its record was extremely good for many years in respect of its technical responsibilities. Its reduced its costs considerably, operated within the increasingly tight requirements of the nuclear installations inspectorate and had a nuclear safety record as good as any in the world. While British Energy was technically sound, however, it was at best commercially unlucky and at worst downright incompetent. It was unlucky in so far as it was unsuccessful in failing to secure the London Electricity purchase in the teeth of opposition from Electricité de France, because the French Government were prepared to extend their pockets far beyond what the market considered a reasonable price. I do not think that EDF has made a great deal of money out of what happened.
	If British Energy had had flexibility and had become a broad-based energy company instead of being almost entirely a generator, we might not have had this debate. Certainly, as has been suggested, the SWALEC deal was probably ill judged initially. The details that have been released, to which the hon. Member for Reigate (Mr. Blunt) referred, show that it was a pig in a poke and that the directors should have been called to account, although it was difficult for that to happen given that they were making plenty of money and passing it on as dividends. Everybody was happy in the best of all possible worlds—or so it seemed. Perhaps because those involved had burned their figures on SWALEC or were frightened off by the London Electricity failure, the company chose not to go anywhere else. It could have taken other opportunities, in the shape of Yorkshire Electricity for one, that would have given it not only a far broader basis as an energy company but the financial support necessary to take on the difficulties that subsequently arose.
	Nothing in the work of the Environment Agency or the nuclear installations inspectorate caused the company undue problems. The reason above all else why little concern was given to the possibility of financial failure is that it takes a particular sort of incompetence not only for a company to run a utility at a loss, but for it to fail to recognise that it is working in a rigged market and that it is only a matter of time before the super profits and high share prices that that market offers will change.
	That is what the hon. Member for Reigate has been incapable of appreciating in all his previous incarnations. The pool system operated brilliantly for the generators and their shareholders, but not in the interests of British industry or the other players.
	The nuclear industry, which was privatised on the back of assets that had just been completed, was in a privileged position. We had one of our most illuminating exchanges in the Select Committee on the valuation of assets when we considered the reasons for the extent to which Sizewell was being written down. A previous permanent secretary at the Treasury, who was then in Barclays de Zoute Wedd and the chairman of the bank responsible for the flotation, used a striking metaphor. He said, "A nuclear power station is a bit like a motor car. Once you've built it and sold it on, like the car leaving the forecourt, it immediately loses a lot of money." The knock-down price of the original sale was suited to the purposes of the privatisation.
	On 31 March 2001, barely two years ago, the system changed, and the privileged position that British Energy enjoyed also altered. The bidding system no longer meant that the price that it bid floated up to the market price and everything was taken care of. That is when the problems set in. If British Energy had been as commercially aware as it should have been, it would have acted immediately. Other generators did that and were able to deal with matters.
	Nuclear power is difficult and dangerous to produce. It can be produced safely, but only with great difficulty. Sadly, those who had the skills and the capability to do that were not the same sort of people as those who were brought in to look after the commercial side of the company. That was the greatest problem. When Robin Jeffrey returned from America, and there was a clear-out on the board, his ambition was to generate even more nuclear energy. He wanted either replacement or additional build. Frankly, he took his eye off the ball.
	Matters were clearly drifting in the summer. That was followed by a crass move whereby Robin Jeffrey said that the company had the ability to call on additional financial support. The humblest mortgage payer knows that one can always get additional financial backing, provided that one can at best service the loan. As we marched through September, servicing the loan became increasingly difficult for the company. When BNFL was asked to reduce some of its prices, it wanted to ascertain whether a deal with some of the Magnox stations was possible.
	I appreciated Mr. Speaker's earlier intervention when my question went on too long, for which I apologise. I was trying to make the point that BNFL was asked to go the extra mile, which it travelled. It was subsequently asked to go even further. At that point, it would have prejudiced its position and been in the Government's arms. As far as I understand matters, BNFL's financial circumstances have not changed in the past six or four months to the extent that it could make a much better offer than that on the table when it made its final deal.
	The current room for manoeuvre comprises the three options that we have discussed today: administration, limping along or nationalisation.

Crispin Blunt: I want simply to establish the facts. The hon. Gentleman points out that BNFL could go only so far at the beginning of September. Has it now gone further as part of the Government's package? That would have an impact on the taxpayer.

Martin O'Neill: I am not privy to BNFL's secrets. As a close observer of its fortunes, and those of the nuclear industry, I simply say that if it went further without material improvement in its financial circumstances, that would spell danger for the company. That is as much as I am competent to say.

Mark Hendrick: I fully agree with my hon. Friend that BNFL should not take any steps that would put it in difficulty. Will he say to the hundreds of BNFL workers in my constituency that he supports them in delivering the goods to British Energy and that he hopes that they will continue to do so in the foreseeable future? Thousands of jobs are at risk. If we were to take the course suggested by the hon. Member for Reigate (Mr. Blunt), those people would be out of work fairly quickly.

Martin O'Neill: My hon. Friend may be over-egging the pudding a wee bit. BNFL is in a strong position in so far as it is a virtual monopoly as far as the United Kingdom is concerned. The French company will not necessarily step in with a lower bid. BNFL has made step changes and radical improvements. We must recognise, however, that the deals that were struck at the time of privatisation were commercially unrealistic. When Robin Jeffrey returned from the United States, he asked the apparently reasonable question, "Why can't I get my nuclear reprocessing done in Britain for the same sort of prices I pay in north America?" In fact, that is not to compare like with like—different circumstances apply—but it was a question that had to be asked. He got a reply of sorts, but it was not as good as he thought that it could have been.
	As with many privatisations, several people in those companies thought that they had died and gone to heaven. They were offered shares at ridiculously cheap prices and bought them through long-term schemes, often to the exclusion of any other form of savings. Those poor souls are now seeing their savings going down the drain. Over the years, when shares in British Gas and other privatisations fell, many hon. Members received letters from constituents asking what the Government could do about it. The fact is that there is nothing that the Government can do about it. That happened when I was an energy spokesman for the Opposition and privatisations took place under the writ of the Tories; it happens whenever such fluctuations occur. In this instance, it is little short of a disaster for many people. For that reason, if for no other, proper provision must be made through legislation such as this Bill. Many of the shareholders and bondholders are small savers, and to dismiss them in the manner of the hon. Member for Reigate is callous. He said that it is in their interests to get a deal. Of course it is—sometimes those savings are all that they have.
	As my hon. Friend the Member for Dumfries (Mr. Brown) said, a trade sale is not a realistic proposition. What worries me about nationalisation is that nobody in the civil service is qualified to run British Energy. There are better managers out there who could run the business, but I am not sure that we could lure them to Victoria street.
	If, in the end, taxpayer's money has to be put up, there must be a means of protecting it. If the company can work its way out of its present difficulties and get itself into a position whereby, as my hon. Friend the Minister suggested, loans can be considered, its fortunes will begin to change. It is important that the business is kept running and that revenues keep coming in. It is much better to keep the power stations going than to have them lying idle while they still have to be cared for and protected. It is not a simple choice. If we discarded just 21 per cent., we would be down to about the lower limit. That is the technical economics of the madhouse. It might work in a wind-driven Wales, in some future independent state that will never arrive, but it will not happen in the United Kingdom, where many people—certainly those in Scotland—depend for half their electricity on the output of two nuclear power stations. I certainly would not want my constituents to go to bed with electricity or power reduced simply to meet the needs of fanatical so-called environmentalists or supposedly hard-nosed business people.
	The fact is that nuclear energy in this country will be required for some considerable time and it would be wrong even to discount the possibility of life extensions for existing stations, because the life of a nuclear power station is a guesstimate at the best of times. It could be cut down the way—I admit that if it were technically wrong to run stations they should be closed—but if they are technically capable of being run and their costs have largely been met, that is perhaps one of the better ways to ensure that the public get some return on the loans and assistance. My hon. Friend the Minister seeks to acquire powers for that, but the proviso, of course, is that the European Union can act.
	There is a matter that we have not discussed, and I hope that my hon. Friend the Minister makes this point when he replies to the debate: we still have to get the underwriting for the deal from the Commission. I believe that there is still some way to go there. We are discussing a minor milestone in the long journey ahead before we clear up British Energy's problems, but I welcome tonight's debate as a meaningful first step along that road.
	I take the point that the Government acted wisely, prudently and in a measured fashion. There was no panic in the Department at that time, and it is wrong and demeaning to officials and Ministers to suggest that. The problem is difficult and it will not be solved overnight, but the Bill is a useful first step on the way to a solution and I welcome it.

Vincent Cable: Listening to the Minister's sober and restrained introduction called to mind a quotation from one of his predecessors, Mr. Fred Lee, who stood up in the House in 1965 and said that
	"we have hit the jackpot . . . we have the greatest break-through of all time."—[Official Report, 25 May 1965; Vol. 713, c. 237-8.]
	With those words, he introduced the advanced gas-cooled reactor programme, which is the basis of British Energy's portfolio. What Fred Lee did not anticipate, and what we know with hindsight, is that the first of those would take 17 years to build, be 500 per cent. over budget and 20 per cent. below specification. Unfortunately, a lot has flowed from that.
	I was brought up in a stern, non-conformist tradition, so I am not sure what the gambling term is for the opposite of a jackpot, but the Government and their predecessors have hit it. That issue is worth pursuing before getting into the substance of the arguments, because, as the hon. Member for Barnsley, West and Penistone (Mr. Clapham) hinted, the package, which is incorporated in the Bill and will lead to the lifting of the ceiling on the Government's commitments to £2.5 billion, comes on top of a lot of other liabilities that the taxpayer is being required to assume.
	A couple of years ago, the late Mike Sadnicki put to the Environment Sub-Committee a paper in which he bravely attempted to calculate that sum. He came up with a figure of about £55 billion—that was £20 billion at current prices, after discounting—which was a conservative estimate of the liabilities that would fall to the taxpayer. Those are liabilities to which we propose to add.
	Returning to the jackpot analogy, when a gambler is losing money, there is always an instinct to stay at the table. I sense that, in a way, that is what the Government are trying to do. The recurrent theme that comes through their arguments on the financial case—we shall come to the wider arguments later—is that it is cheaper to stay at the table and keep British Energy in solvent restructuring than for it to go into administration, and cheaper to keep production going than to close it down.
	This is a technically complex area and I do not in any sense claim to be an expert on it, but all the figures on the financing aspect that I have seen suggest that both propositions are wrong in fact. The Minister shakes his head, and he may be right. None of us has a definitive answer. However, before the Bill proceeds through Parliament under the Government's hurried programme, can we have an independent financial assessment? I do not know who could make that assessment in the space of a few weeks, but perhaps the National Audit Office or the Select Committee on Trade and Industry, under the chairmanship of the hon. Member for Ochil (Mr. O'Neill), could do it. Is administration really more expensive than solvent restructuring? Is keeping production going cheaper than stopping it? We might at least agree on issues of fact before we debate issues of principle.

Simon Thomas: Does the hon. Gentleman agree that we need an independent assessment of one of the Minister's arguments? He said that it is better to give British Energy a loan so that it can continue to pay money into the public nuclear liability contingency fund. Should that argument not be open to scrutiny? An independent assessment would be useful.

Vincent Cable: That is part of what I propose. I shall return to the details of the financial arrangements.
	I have spoken on trade and industry and energy for two and a half years, in which time there has been a long succession of Conservative spokesmen. Although I have rather lost track of who they all are, until today I could almost rely on the fact that they would put up a robust defence of private nuclear power and of putting more money into it. I listened carefully to the hon. Member for Reigate (Mr. Blunt), and something has changed. I do not know whether there has been a rebranding exercise or whether the hon. Gentleman has been allowed to use his initiative and has come up with a sensible statement on many key issues. Much to my surprise, I found myself agreeing with much of what he said.
	On the other hand, I profoundly disagreed with the Minister and the Government's case, and my colleagues and I will vote against the Bill. Temperamentally, my instinct is to find common ground and to try to identify areas in which we start from the same point. On nuclear safety, the Minister was absolutely right to say that safety must be guaranteed. That is obvious: nuclear power stations cannot have small accidents—any accident is a potential catastrophe. We entirely share that starting point.
	The problem with the Minister's argument is that the only risk that he identified is that of a sudden—his word—shutdown of all capacity in the industry. No one has ever suggested that. No one is promoting it or thinks it remotely feasible. If the matter went into administration, the administrator would almost certainly keep the power stations running. So long as they cover their interest charges, that would be in the economic interest. We certainly do not advocate a sudden shutdown.
	We know from experience in the United Kingdom, quite apart from that overseas, that nuclear power stations can be shut down. Torness, on the east coast of Scotland, is shut down at present.

Anne Picking: No.

Vincent Cable: It has had a prolonged period of disruption and interruption of production, as the hon. Lady knows. Stations can also be shut down permanently and decommissioned. That process is beginning in the UK with Windscale, Dounreay and so on. Safety can be guaranteed in that environment. Provided that any contraction is orderly and managed, there is no reason why there should be a safety problem.

Andrew Lansley: The hon. Gentleman appears to suggest that he has moved on to making the safety case from making the financial case. The two are in fact indissolubly linked. Does he accept that if we moved toward closure of a plant, we would bring forward substantial decommissioning costs for which no contribution has been made during the life of the plant? One reason why British Energy's average cost of production went up was that Torness was shut. Even temporarily shutting down a plant results in a dramatic rise in the industry's overall costs.

Vincent Cable: The hon. Gentleman is logically right, but the sums involved in the argument are often not true. The Government, and, I suspect, the hon. Gentleman, use the magic figure of £5 billion for the decommissioning costs that would be brought forward. When one actually looks into decommissioning costs—I am sure that the hon. Gentleman knows this because he is very knowledgeable about the industry—only a small part of the costs, in the order of £600 million, must be incurred in the near future to stabilise the core of the reactor. The remaining present value of the decommissioning process is £300 million. The cost that would have to be brought forward is therefore less than £1 billion, not the £5 billion suggested by the Government and hinted at by the hon. Member for South Thanet (Dr. Ladyman) in his intervention. The hon. Member for South Cambridgeshire (Mr. Lansley) is right to say that there is a link between safety and costs, but the figures often put before us as the estimated cost to the taxpayer of a reduction in, or phasing out of, production are wildly exaggerated.
	Safety is the first issue; the second is security of supply. The Minister is right to say that no one wants an environment in which substantial numbers of people risk being disconnected from the electricity supply. That is common ground, and we do not argue that people should be put at that risk. The Government's problem is not with us—I am no expert at calculating spare capacity—but with their own regulator, who consistently points out that there is a very large margin of spare capacity. According to the statement that he sent us a couple of days ago, it is 22 per cent. at the very least. That is considerably in excess of the capacity of British Energy, even on a crude aggregate basis.
	The regulator also pointed out that a large amount of capacity has been agreed commercially—consensus has been reached—but cannot be brought forward because of low prices in the industry. There is a basic paradox at the heart of the Government's argument. If there were less capacity in the nuclear industry—if some of it were withdrawn—the price would rise. That would enable nuclear power to operate more profitably; it would also enable other investment to come into the industry. The regulator has never suggested—indeed, he has gone out of his way to suggest the opposite—that security of supply would be threatened as a result of British Energy's going into administration or of capacity being withdrawn.
	The third issue has to do with competitors. It is partly a legal issue, and it would be neither useful nor appropriate for us to comment on the legal ruling that will come from the Greenpeace case or on judgments from the European Commission. There is, however, a serious problem in that the Government are favouring one company over others through the Bill and through bailing out that company. It is important to have some sense of the damage being done to British Energy's competitors.
	One small part of the market is combined heat and power, which has lost about 75 per cent. of capacity. Powergen has had to write down about 90 per cent. of its investment in the industry. CHP is receiving no compensation or help from the Government—nor are renewable energy and other producers. The Government will have to explain to the European Commission why British Energy is being helped while other operators are not. Moreover, it is not just being helped temporarily, but being given permanent, ongoing help. As I understand the European competition rules, the Government will have great difficulty in getting that through.

Martin O'Neill: The hon. Gentleman chooses to forget that renewable energy is receiving a lot of financial support. Like combined heat and power, it has been exempted from the climate change levy. CHP is also a dual fuel, so that if gas rises in price, as it has done, people stop using it and go for coal or other forms of generation. All that results from the working of the market, which the hon. Gentleman vaunts, and has precious little to do with the Government's policy of favouring or not favouring British Energy. The Government have favoured other forms of energy in other ways.

Vincent Cable: The hon. Gentleman's specific points are right, but he knows that renewables and combined heat and power have been disproportionately hit at a time when we are talking about helping a particular sector to continue to operate as before.
	Let me turn to the core of the Bill; the argument about financing on which there is some common ground. A lot of the problems have arisen from the way in which the privatised company operated. It is said that the privatised company was just unlucky because of the new electricity trading arrangements and the way in which the auction system works. However, as I recall, British Energy never objected to NETA. I was involved in the Utilities Bill 2000 and the associated legislation. A variety of lobbies petitioned us about the problems that NETA might cause. British Energy never said a word and was entirely optimistic that it could compete in the market.
	In the meantime, the company made some severe commercial misjudgments. Quite apart from passing up the opportunity for diversification that the other power companies took, it bought a power station for £50 million that is now worth £6 million. There was a succession of such judgments, including a special dividend of £48 million when the company was losing money. The whole ethos of the company is summarised by the manner in which Mr. Jeffrey is leaving it. The company is virtually bankrupt, but he is being paid off with £300,000 compensation, plus a £150,000 a year pension. He now says that that is not enough. Almost single-handedly, that gentleman is making the case for the Company Directors' Performance and Compensation Bill that the hon. Member for Tunbridge Wells (Mr. Norman) will be proposing on Friday. It also speaks volumes about the way in which British Energy has been run. There is some common ground on that.
	I accept also that, since September when the crisis emerged, the Government have accepted that there must be burden-sharing. The private investors will take a big hit, even as a result of the Bill. As I understand it, the creditors will lose roughly two thirds of their assets. There is a hard-headed question—if the Government are acting on behalf of the taxpayer—as to why any wealth should be left in the company.
	I welcome the acceptance that we are now debating—in a way that we could not three months ago—the pros and cons of administration. I raised it when the crisis broke and was accused by one or two Labour Members of being wildly irresponsible: "How could the hon. Gentleman possibly talk about administration? It is sheer lunacy." It is now in the Bill and accepted as a practical and, I would say, probable option.
	Simply arguing about administration versus solvent restructuring is only the tip of the iceberg. There are a lot of subsidiary issues that, somehow or other—in a day's debate in Committee and in the House of Lords—need to be addressed. If the company went into administration, there would be a variety of options. The administrator could keep running British Energy for a long time, provided that it covers its basic costs. The company could be nationalised—one of the options that has been raised. It could be sold, though that seems improbable. It could be taken into a public interest company, with a view to an orderly and gradual closure. Those are all enormously important options that we have not even begun to consider. If we are to consider the Bill properly, we must look at all of them.
	On financing, I accept that there is some common ground, although there are some fundamental differences. I hope that, through an examination of the accounts or in other ways, we shall get some answers to these problems—about the relative costs of keeping British Energy in solvent restructuring or putting it into administration, or the partial closure of plants. First, what is the cost of the Government's proposals? There is the Government assistance per se: the £650 million loan, the ceiling of which was increased, under EU proposals, to about £1.15 billion. The Bill mentions £2.5 billion, of which only £350 million has been drawn so far. Potentially a very large sum of money that has not been disbursed will be disbursed if the Bill is passed, in the form of aid to the company.
	In addition, we have the new contracts of BNFL—a public sector company—amounting to an additional £150 million to £200 million a year. We have the back-end liabilities commitment of £150 million to £250 million a year. We are talking about a total taxpayer commitment of about £4.8 billion over the next 10 years; it could be £6 billion. It would be useful to know, at the very least, the order of magnitude about which we are talking. Very large sums are being committed under the Bill.
	If the option of administration were to be chosen, the taxpayer would lose the private company's contribution to decommissioning. Although it is technically complex, we should reflect on that subject. It is agreed that the private company will pay 65 per cent. of net cash flow, after interest payments, into the decommissioning fund. On the assumptions that are being made in the plan, £100 million a year would go from the private company into decommissioning. That is why the Government want to retain the company as a private operation.
	However, the assumptions that lie behind that are wildly optimistic. It is assumed, for example, that the company can make a £1.50 margin per megawatt-hour on its operations, while operating at much higher levels of efficiency than before. It is assumed that the plants will be able to operate at maximum efficiency, without the kind of disruption that we have had in at least two reactors recently. It is assumed that there will be income from the American subsidiaries, which are being sold off. The assumptions are wildly optimistic and have no basis in reality. If the money is not forthcoming, there is no reason to continue to expose the taxpayer to the continued liabilities through the subsidy.
	The more radical option that we should look at is not just administration, but the possibility that at least some, if not all, of the reactors should be taken out of production before the end of their natural lives. There are various time horizons for that, but let us at least look at the options. The Government have always argued that that would be financially disastrous because of the £5 billion of liabilities. I hope that, in my answer to the hon. Member for South Cambridgeshire, I answered that point. But the figures that would confront the Government, were they to go for premature closure, are far lower than have been bandied about in the past. Given that there is doubt about them, let us at least have an open, honest and independent inspection by the National Audit Office, or somebody else, to validate the figures.

Andrew Lansley: I have detected no reference from the hon. Gentleman to British Energy's intention in the solvent restructuring deal to issue £700 million of new debt, £275 million of which would go into the liabilities fund. By extension, that is capitalisation for the operation and a contribution to meeting liabilities that would not be available in the event of either administration or nationalisation.

Vincent Cable: I thought that I acknowledged that when I said that the creditors would lose two thirds of their investment, which would happen if they took shares in return for bonds in those circumstances. I am happy to argue these points with the hon. Gentleman at greater length. There may be an element in the calculation that I have missed; but I do not think so.

David Hamilton: The hon. Gentleman mentioned the investors. As someone who does not gamble very often, I take the view that people who buy shares are gamblers; a loss as well as a profit can be made. I do not have much sympathy for anyone who buys shares—even an elderly person—and then cries about not making a profit. When we talk about discussing energy requirements, we should be talking about the cost to Britain and to the taxpayer.

Vincent Cable: I think that the hon. Gentleman makes two points. As regards the interests of investors, many of the shareholders are sophisticated investors and have no reason to complain about the loss that they will suffer. However, I do not gloat over that. After all, there are nuclear energy shares in our pension funds, so everybody loses. We have to accept that there is no shareholder value left, but I take no pride or joy in saying that.
	The hon. Gentleman's second point leads me to the conclusion that I was about to draw: we need to consider the wider energy picture. There is obviously a link between this debate and the larger debate that we shall hold on the White Paper.
	I was about to make a concession. Although many of the Government's arguments are weak, we need to think seriously about the carbon dioxide issue. I wholly accept that my approach would mean higher CO2 emissions, at least in the short term. I accept that that is part of the price we have to pay for a sensible and honest restructuring of the nuclear power industry. However, in taking that approach, I am in fairly good company: organisations such as Greenpeace and Friends of the Earth take the same view. Like me, they would argue that, whatever happens in the next two to four years, it is much more important that we are on the right trajectory for the development of renewables, energy conservation and energy efficiency. It is important that all those elements are in place.
	If that overall approach were adopted, it would be possible to see a future in which we had less reliance on carbon emissions and nuclear power. However, the process will be difficult. I look forward to debating these matters again in the context of the White Paper.

Stephen Ladyman: I am not entirely sure what I have heard from the Opposition spokesmen. The hon. Member for Twickenham (Dr. Cable), who spoke for the Liberal Democrats, was at least honest when he said that no shareholder value remained in British Energy, but the hon. Member for Reigate (Mr. Blunt) was less honest. The implication of his solution was that British Energy could be closed without tackling the problem of shareholder value.
	If we adopted the hon. Gentleman's solution—thereby eradicating shareholder value—the Conservatives would be the first to say that as the Government had engineered a situation in which shareholders had lost all their money they should step in with compensation. Have we all forgotten the Conservatives' comments about Railtrack and the problems in the rail industry? If the hon. Gentleman really believes that British Energy can be put into the hands of administrators and continue to be run while maintaining shareholder value, he is setting out a bizarre contradiction.

Crispin Blunt: rose—

Stephen Ladyman: As the hon. Gentleman is anxious to intervene, I am happy to allow him to explain himself.

Crispin Blunt: It is the hon. Gentleman's statements that are bizarre. I ask only that the market should operate. Of course shareholders will be bottom of the administrator's list. If any value remains, there will be a distribution to existing shareholders, but the taxpayer will have a prior charge—as indeed will the bond holders, the trade and other creditors, and possibly even Robin Jeffery with his settlement terms. If the Government intervene in the market, however, there will be a price to be paid.

Stephen Ladyman: The hon. Gentleman says that the market should operate, but the consequence of its operating as he suggests will be that no shareholder value will be left, and the Conservatives would shout the loudest that the Government had brought that about. Another consequence of his suggestion is that, ultimately, the operation of nuclear power would be run down—in that he finds common cause with the Liberal Democrats. There might be a debate about how quickly that rundown would take place. The hon. Member for Twickenham said that he knew of no one who had suggested that it should be shut down immediately, although that is exactly what Greenpeace proposes. However, at least he was honest enough to admit that the consequence of shutting down the nuclear power industry, if we do not agree to the Bill, would be an increase in carbon emissions. That would have a significant impact on our ability to meet our Kyoto obligations and would certainly mean that we would contribute to greenhouse gas emissions for a long time to come.
	The hon. Member for Twickenham did not point out that the Government's figures show that between 12,000 and 24,000 people die prematurely each year as a result of carbon burning. If we do the maths, we realise that nuclear power, which currently generates a quarter of our electricity without burning carbon, saves between 2,000 and 4,000 lives in the United Kingdom each year. If we decide willy-nilly to adopt a proposal that would run down nuclear power and increase carbon emissions, we shall not only contribute to greenhouse gases but we shall also add to the number of people who die every year.

Mark Hendrick: I agree with my hon. Friend's accurate comments about CO2 and about share prices. Does he agree that if the proposals of the hon. Member for Reigate (Mr. Blunt) were adopted and no financial assistance were given not only would British Energy collapse but thousands of jobs would be lost, including 2,000 at Springfields near Preston in my constituency?

Stephen Ladyman: My hon. Friend is right. To the best of my recollection, neither of the Opposition spokesmen mentioned jobs. Tens of thousands of people would lose their jobs if their solutions were followed, which seems utterly bizarre.

Andrew Stunell: The hon. Gentleman appears to have missed the central part of the contribution of my hon. Friend the Member for Twickenham (Dr. Cable): if nuclear capacity is taken out of the system, it will provide a platform on which other technologies can flourish. They will provide employment, but there will be a reduction in carbon dioxide emissions. The hon. Gentleman is doing some very special pleading on behalf of a dying industry.

Stephen Ladyman: The hon. Gentleman should be careful about what he says. The technologies whose cause he usually espouses in this place are based on renewable energy and are several times more expensive than nuclear power. Unless we distort the market there will be no future for those technologies. I challenge Members to provide the House with the name of any serious engineer or other expert who believes that the target of 20 per cent. production of renewable energy by 2020 is a practical possibility. Most of the experts do not even believe that the Government's target of 10 per cent. by 2010 is possible.
	Even if we put all the resources of Government behind renewables, and even assuming that we maintain the renewables obligation that is part of the existing marketplace distortion, which we all seem perfectly happy to accept, no expert believes that 20 per cent. of our energy will be produced from renewables by 2020. To use wind power, for example, would require us to build 40 windmills every month between now and 2020. As my hon. Friend the Minister for Energy and Construction pointed out so eloquently in a previous debate on energy, that will not happen, especially in areas of the country where the councils are under Liberal Democrat control. Every proposal for windmills is opposed on planning grounds in those areas.

Martin O'Neill: A further point is that the wind does not blow all the time. We should thus require base load generation of some form—probably using gas or coal, the other two options for mass-produced energy.

Stephen Ladyman: My hon. Friend is absolutely right. Professor Laughton of the university of London has done the figures for us—if anyone cares to get hold of them and read them. He has shown that the prevailing winds are such that, in this country, the wind does not correspond with the demands for peak electricity consumption. We would have to spend £30 billion to £40 billion to build windmills all around the country to generate 20 per cent. of our electricity, and we would still have to match those windmills with onshore alternative energy supplies—almost certainly burning carbon—to guarantee continuity of supply. That would make an absolutely nonsensical energy policy. I put it to the House that the only energy policy that will make any sense for this country is one in which we have a balanced supply portfolio. That will require some carbon burning in the form of gas and clean coal.

Madam Deputy Speaker: Order. May I bring the hon. Gentleman back to the content of the Bill, which is the restructuring of British Energy?

Stephen Ladyman: I certainly take your advice on board, Madam Deputy Speaker, but I simply point out in my defence that we are seriously debating whether to accept the Bill and, if we say no to the Bill tonight, we are saying no to British Energy and no to nuclear power, so the context in which we make that decision must be clearly understood.
	I do not see a future for nuclear power unless we accept the Bill, and we must therefore ask ourselves whether we should make a one-off loan and provide new arrangements for the industry and whether that solves our problem, or whether we are simply going to find ourselves in the same position six months, 12 months or a few years down the line.
	My concern is that although my hon. Friend the Minister for Energy and Construction addressed very well the need to support British Energy in the short term, what he did not do so well—presumably because he expects to have such a debate when the White Paper is published—is talk about the industry's long-term framework, in which nuclear power can flourish as one of the components of a balanced portfolio.

Brian White: Does my hon. Friend accept that there is a role for renewable sources and sustainable energy in the wider context?

Stephen Ladyman: I absolutely agree that there is such a role, but we can make a reality of that role only by distorting the marketplace in exactly the way—

Madam Deputy Speaker: Order. Once again, may I bring the hon. Gentleman back to the purpose of the Bill—the financing of British Energy?

Stephen Ladyman: I shall certainly do that, Madam Deputy Speaker.
	The Bill will give British Energy a future. It minimises the expense that we can expect the Government to incur in guaranteeing that future. We must ensure that a way forward is built into the White Paper that will guarantee us a safe and consistent energy supply in the future and that will involve the least hardship for British Energy.
	Points have been made about how British Energy got into this mess, and we have to accept that there have been considerable management failures, some of which my hon. Friend the Member for Ochil (Mr. O'Neill) mentioned earlier. I agree with him that management caused some very serious problems, but, equally, the Government must accept that NETA has had an impact on British Energy. Decisions about the rateable values of the company's sites have had an impact on its economic viability. Both those things need to be addressed if the Bill is to succeed in its aim of maintaining British Energy as a viable, going concern.
	We must accept that the current wholesale price of energy generation—about £16 per megawatt hour—is lower than the economic price of generation for all electricity suppliers, not just the nuclear power industry. Indeed, British Energy's current price is very close to the wholesale price at about £17 per megawatt hour. However, it is not sustainable to have all forms of generation generating below the wholesale price, and I hope that my hon. Friend the Minister will address that in his winding-up speech.
	My hon. Friend the Minister should accept that, although NETA has forced down the wholesale price, the retail price has not reduced so dramatically. If we take away the discounts that people in the domestic sector receive for changing their supply company and the short-term offers that some companies make, the retail price of electricity is about £66 per megawatt hour—four times the wholesale price. That seems a rather strange margin to allow the industry, and we need to consider how NETA operates, not only because of its impact on British Energy but because the whole energy industry is unsustainable at that price.
	Apart from the rateable value of sites, which various hon. Members have already mentioned, we should recognise the fact that the nuclear power industry is the only form of generation that has to internalise the costs of waste and all the environmental costs. If we were to force the carbon-burning industry—whether clean coal, gas, or even including burning petrol in cars—to take account of its environmental costs, it would be by far the most expensive form of energy on the market today, and we have to judge the Bill's merits in that context.
	The Bill is very much a short-term solution to British Energy's problems, but it will not stand alone. It must go hand in hand with other measures included in the White Paper to promote a balanced portfolio and ensure that this country's nuclear power industry has a future, so that we can continue to produce clean energy from nuclear sources, as well as developing the other forms of energy that are required.
	We need a package of measures on top of the Bill to create a sustainable energy policy for this country, but at least the Bill is a good start. Opposition Members would be very unwise to vote against it because they will be judged in the long term by the impact that their action would have on British Energy's share value and on the environmental damage that, by implication, they would force on our country.

John Horam: I was very interested in the remarks made by the hon. Member for South Thanet (Dr. Ladyman) because he hit on one of the crucial points that none of the Front-Bench spokesmen have emphasised so far, which is that the whole energy industry cannot sustain the present prices. He quoted the figure of £16 per megawatt-hour, whereas £22 per megawatt-hour is needed for anyone to be profitable, but he must ask why prices are so low. Of course the answer is—

Madam Deputy Speaker: Order. Once again, may I remind all hon. Members that the Bill is about financial assistance to British Energy?

John Horam: With due respect, Madam Deputy Speaker, the reason that British Energy is in this position is that it is not profitable because it has had to operate in a market where the prices are simply unsustainable. That is the reason why we are discussing the Bill today, and I am concerned about the operation of NETA, which the Government imposed about 18 months or so ago, and the prices are unsustainable as a result. Of course there are other reasons why we are in this position. I fully accept the Minister's point that British Energy's problems are not simply to do with prices.

Michael Clapham: The hon. Gentleman makes a point about NETA, but does he accept that the way in which nuclear energy was favoured under the marginal pricing system of the pool is the reason why it was able to appear to be economic and that, when it had to face competition under NETA, it could not hack it?

John Horam: That is a substantial point. The problem has been that we have gone from the pool situation, on which the hon. Member for Ochil (Mr. O'Neill) commented favourably, to the reverse situation in which no one can make any money at the current price. That is because we have too much capacity—I think that the Minister mentioned 22 per cent.—and because of the way that the NETA system operates. It is a brutal market system.

Richard Ottaway: Yet another reason is that the market has not been allowed to operate freely. The most uneconomic generators—the Magnox nuclear stations—are hopelessly unprofitable and are forcing prices down, and the market cannot therefore operate in a genuine way.

John Horam: Whatever may be the case, the fact is that the Government brought in a system that is wholly predicated on a straightforward, simple, unaffected market system, leading to prices that are unsustainable, which, among other factors, has led to the present pass of British Energy. Nothing will change until something is done about the NETA system—that is the point that I want to get across.
	The arrangements that the Government are currently introducing, as the Minister has argued, may be necessary, short-term palliatives to deal with a crisis situation. What he cannot escape, however, is the Government's responsibility for introducing a pricing system that has led to this pass. That is the argument with which the Government must contend.
	In response to the arguments of the hon. Member for South Thanet, I agree that we need a balanced system with regard to the various types of energy supply. Not only do we need a balanced system but we need to take into account the social consequences, in terms of jobs, and the environmental consequences of our energy policy. That is extremely complicated, and not all of those factors can be taken into account in dealing with a short-term situation such as British Energy and its continuing performance.
	That is why my hon. Friend the Member for South Cambridgeshire (Mr. Lansley) was right when he teased out from the Minister his casual approach to the question of the White Paper. Waiting for that White Paper is like waiting for Godot—we have been waiting for months and months. The Committee that I chair, the Environmental Audit Committee, published a report on renewable energy last July in the expectation that some sort of White Paper would appear in the autumn. Autumn passed, December and Christmas came, we began to expect it in January or February, and we are now told that it may appear in February or March. While I respect the Minister's point that he would rather get it right than produce it too early, the way in which this debate is taking place is like "Hamlet" without the prince. We need to consider energy policy in the round, which the Government should also do before they make crucial decisions involving millions and potentially billions of taxpayer's money without any of us knowing where we are proceeding in terms of wholesale energy policy.

Martin O'Neill: Does the hon. Gentleman concede that in relation to the specifics of the company whose financial plight we are trying to address this evening, something like 20 to 25 per cent. of its generating capacity is not affected by NETA in so far as it is under a private agreement with Scottish Power and Scottish and Southern Energy? There will be an opportunity before too long, when the new British electricity trading arrangements are introduced, to recast the whole equation and to see it if it can be done better. That does not need a White Paper, as we will be dealing with market situations that will prevail for perhaps seven to 10 years. A White Paper will deal with new build that will probably barely have started within that time scale.

John Horam: I take the hon. Gentleman's point, but, none the less, the operation of the NETA system has been a contributory factor to the current plight, and we are having to spend millions and billions of pounds to get out of it. It would have been better if, from the start, the Government had instituted a market system that was within a logical framework of a clear energy policy. As was pointed out, although the details of the situation can vary, that would at least ensure the right trajectory. In that respect, the measure is flawed, as, first, the NETA arrangements take no account of the need to encourage renewables. A renewables obligation exists, as the hon. Member for Ochil mentioned, but it is a very weak instrument. The hon. Member for South Thanet said that he knew of no engineer who would say that the Government could achieve 20 per cent. of our energy from renewables by 2020. In Denmark, however, 25 to 28 per cent. of the energy supply is from renewables, and that has been achieved in less than 17 years—the period between now and 2020. I confess that I cannot name an engineer who would support my case, but, if it has been done in Denmark, I cannot see why it cannot be done here.
	I agree with the hon. Member for South Thanet, however, that we must have a balanced approach, and I concede that nuclear has a role to play as well as renewables. I am not one of those people who believe that we should have renewables at all costs and that we can do without nuclear altogether. Clearly, that is not sustainable in the current situation.

Madam Deputy Speaker: Order. I wonder whether the hon. Gentleman could start to address some of his remarks to the specifics of the Bill.

John Horam: Thank you, Madam Deputy Speaker, for that sensible reminder.
	Nuclear energy has a role to play, but we cannot say currently what will happen: whether administration or the solvent restructuring about which the Government are talking will be pursued. We do not know how much money the taxpayer will have to fork out. The Government must consider the NETA arrangements fairly soon. I agree that we must not talk too much about the White Paper, which we hope that we will debate in the next couple of months, but one thing that the Government can do is talk to the regulator about how he is operating. I notice that the Minister is laughing rather extensively about that. He may regard talking to the regulator as impossible. Certainly, when we interviewed him while discussing these matters in the Select Committee, we found him resistant to suggestions that even the Government could talk to him. The fact is that as a result of the way in which he has operated the arrangements, nuclear energy has faced the problems that the Minister is trying to address today.

Simon Thomas: Does the hon. Gentleman agree that one of the problems with the regulator, which we examined in the Select Committee, was that the environmental and social guidance promised in the Utilities Bill had not been delivered to the regulator at exactly the time when the debates about NETA and British Energy were taking place? In fact, the House only approved them a few weeks ago. That has also been a failure in the NETA arrangements.

John Horam: That is why I am afraid that the Government, although they have a crisis agenda with regard to British Energy—they must handle it one way or another, and they have come forward with a solution this evening—have gone about their policy in the wrong way. The cart is being put before the horse, as we do not know where we are going, and we do not know the priorities of the Government in relation to the various alternatives. We are discussing today a Bill that puts billions of pounds in the hands of a particular organisation whose future role we cannot yet envisage.

Robert Smith: Does not the hon. Gentleman think that the last remarks of the Minister in relation to the White Paper having no effect on the financial situation of British Energy tend to suggest that its proposals will not be exciting or radical?

John Horam: Again, that point has been made repeatedly. The fact is that the Government have addressed these issues often. A performance and innovation unit report has been published, we are expecting a White Paper, and papers have been published previously. All of them, however, are expressed in bland generalities that do not grasp the nettles that must be grasped. That is why the Minister must now grasp in the short-term a particular nettle, as a consequence of not facing up to the difficult choices that a sensible Government would have made years ago. This Government have been in power for five and a half years.
	We have reached a stage at which we have no sensible energy policy. Such a policy has a major contribution to make, not only to manufacturing industrial strength—which it has done, because prices have been very low; I fully concede that that has been of great benefit—but also to environmental policy, to Kyoto and to social questions. None of that has been forthcoming. So the Government have put the cart before the horse, which is one reason why I shall vote against the Bill.

Kevin Barron: I first apologise to the House and my hon. Friend the Minister for not being here at the beginning of the debate. I wrote to Mr. Speaker and said that I had problems getting here.
	I want to address a number of issues in relation to the Bill. I found it amusing to listen to the end of my hon. Friend's speech and to the speech of the Opposition Front-Bench spokesman. I have been in the House for nearly 20 years. I came here from an energy industry and had energy interests for many of those years, to the extent that I served on the Opposition Front Bench considering the Bill that became the Electricity Act 1989. I remember very well sitting through many months of consideration, with my right hon. Friend who is now the Prime Minister, who was then leading for the Opposition in the shadow Cabinet.
	If anything could have been predicted, it was the state that British Energy finds itself in today. During that Committee stage we had a plethora of leaks of letters, draft letters, speeches and draft speeches from people who were then members of the Central Electricity Generating Board but who were about to be senior participants in the new privatised companies that were to come into being when the industry was put into the private sector.
	The nuclear industry was to be with a company, National Power, which would take over 70 per cent. of electricity generation. That did not happen. The arrangement was withdrawn in 1990 because it did not stack up. Nobody could answer the question that the hon. Member for Twickenham (Dr. Cable) attempted to ask today, when he said that we should have an independent assessment of the costs of the nuclear industry. Twenty years ago nobody knew the costs of the full nuclear fuel cycle, and I suspect that nobody knows them now. The back-end nuclear liabilities can to some extent be predicted, and in the Electricity Act there was an attempt to do that. I shall address a couple of comments to that a little later.
	At that time the Government were convinced that the nuclear industry could stand up in the private sector and that it would be profitable. The hon. Member for West Worcestershire (Sir Michael Spicer) was Under-Secretary when we considered the Act in Committee. He was adamant that
	"The Government believe that the non-fossil fuel obligation"—
	it was actually a tax on fossil fuels to assist the nuclear industry—
	"will result in four PWRs being built. PWRs are an efficient way of producing nuclear electricity."
	He later said that my now right hon. Friend the Prime Minister had raised two points:
	"His second question was whether I accept that nuclear electricity will necessarily be more expensive. I do not accept that, for at least two reasons." —[Official Report, Standing Committee E, 19 January 1989; c. 262-263.]
	One was the environment and the other was that he was adamant that PWRs were the future of nuclear generation in this country, and that it had a future. That was not true. It did not work. Sizewell B was completed, but we saw nothing of the other PWRs, and we have not seen them since.

Mark Hendrick: Does not my right hon. Friend accept that at the time he is speaking about, in the 1980s, there was not the same degree of liberalised market, under pressure from the European Commission, as there is now? The single market was not around, and there was not the same pressure from the environmental lobby, with the knowledge of the greenhouse effect.

Kevin Barron: We shall not have a debate on the greenhouse effect now, but it is right to say that those other two points did not apply at that time. But the Opposition argued in Committee about the horizontal privatisation of the electricity industry, which meant that generators could not own supply companies. I and many others went to America to see the privatised electricity industry. Ministers also went to America, where many of the companies concerned owned the energy source, the generation plant and the supply companies. They were supplying into homes. It was that type of vertical privatisation that we should have had in this country. But we do not have it, so I want to move on.
	There were the seeds of the problems before us today. The Government are right to act by introducing this Bill to ensure the safety and security of supply and to deal with nuclear liabilities. British Energy is currently attempting to restructure. If it fails, it is highly likely that no private company will want it. What we are doing in the Bill is to make sure that the Government could be a purchaser of last resort. That is something that we should vote for.
	It is the height of irresponsibility for the hon. Member for Reigate (Mr. Blunt) to say that the market should operate, that if the company cannot be reconfigured and goes into administration, and if there are no takers, it is as well that it should go out of business. That shows a complete misunderstanding of the nuclear industry and the life cycle of nuclear plants.
	I should like to ask my hon. Friend the Minister about the likely effect of repealing sections 72 and 74 of the original Act, which restricted the Government's powers to acquire shares in companies that were formed before privatisation. The relevant clause will give the Government power to acquire shares. How does my hon. Friend see this operating?
	In a debate in Westminster Hall on 3 December 2002, my hon. Friend gave the reasons why the Government are taking this action, stating that there were two main reasons and three subsidiary ones. The first of the subsidiary reasons was
	"to maintain an indigenous energy source".
	Another was to meet our environmental obligations, which everybody would say we have to do. Both Opposition Front-Bench spokesmen should reflect upon that if they are going to vote against the Bill. The third was that
	"it would cost more to shut nuclear power stations than it does to keep them open."—[Official Report, Westminster Hall, 3 December 2002; Vol. 385, c. 198WH.]
	The hon. Member for Ceredigion (Mr. Thomas) is shaking his head. Nobody knows the cost of the full lifetime of the nuclear cycle. I remember the debates 10 years ago when people asked "What do we do when a nuclear power station closes? Do we leave it alone for 10 years, 50 years or 100 years, before starting to dismantle it, because it will be more inert then?" Nobody knows the cost. I said that at the beginning of the debate, and I firmly believe it. Nobody has yet convinced me that we could switch off the current nuclear power stations and be able to maintain them as they are for a period. The suggestion is the height of irresponsibility.

Simon Thomas: British Energy has to put into its accounts some account of this "height of irresponsibility", because it has to say what the liability costs are. Its accounts say that for the first five years the liability costs about £600 million, which is the very minimum of what we are giving British Energy in the Bill, and that the vast majority of costs are after 35 years. Therefore, the right hon. Gentleman should accept that it is unproven that the open-ended cheque that we are writing for the nuclear industry in the Bill is any better than the real decommissioning costs of nuclear energy.

Kevin Barron: I think that the hon. Gentleman is second-guessing on that. I shall have something to say about what the Bill does, especially to schedule 12 of the Act. I well remember the debates in Committee about this issue. Nobody can say that we could turn the nuclear stations off tomorrow, whether we have excess generating capacity or not—and we have. We have to recognise also that for most of their lives these generators have been base-load generators, and there is a lot of other generation that would be put in place. That may have severe implications for electricity generation in this country.

Andrew Stunell: Surely the right hon. Gentleman appreciates that for years nuclear plants throughout the country have been turned off, when necessary, for maintenance, or left idle for periods, and then brought back on stream when the market would bear it or the repairs were completed. He is painting a wholly unrealistic picture of the way in which nuclear plants are brought on and off stream.

Kevin Barron: On liabilities, if nuclear plants are turned off, any revenue stream will end, and that has major implications for the taxpayer. We cannot wish these things away. The issue of whether we ought to have used nuclear plants in the past or of whether there should be new ones in future does not matter; we will wait and see what the White Paper says. However, it would be irresponsible to turn off plants, and the taxpayer may end up having to spend more money.

Stephen Ladyman: I agree with much of what my right hon. Friend says. Does he agree that, in real terms, the cost of decommissioning these plants is the same whether one does so early or at the end of their lifetime, but if we decommission them early, we will receive no profit from the electricity that they could have been producing in the meantime?

Kevin Barron: That is exactly the point. They are earning revenue for British Energy, and they will continue to do so if the company is saved.

Andrew Stunell: rose—

Kevin Barron: I shall not give way because I have only about four minutes left, and I want to finish my speech.
	In the Westminster Hall debate, the Minister used the word "indigenous" to describe nuclear energy. I have strong thoughts about other indigenous fuels which I would like to express, but not in this debate. I know, Madam Deputy Speaker, that I cannot do that. I just hope that the last colliery in my constituency, which is under threat, will still be around when we are able to debate the energy White Paper in a few months. Some people tell me that that is doubtful; I hope that they are wrong.
	I turn briefly to clause 3, which amends schedule 12 of the Electricity Act 1989. That provided for financial assistance from the Government for nuclear liabilities, up to a ceiling of £2.5 billion. The Bill will remove that ceiling. I have a couple of questions for the Minister. One concerns a report in The Mail on Sunday yesterday. I gladly admit to my hon. Friends that I am guilty of buying and reading that newspaper. [Hon. Members: "Shame."] I know that it is a shame, and most of its contents are a shame. The article says:
	"As part of the restructuring deal, the Government has agreed to pay £2.1 billion towards the generator's decommissioning liabilities . . . There is also growing confidence within the company that the White Paper on energy will not spell the end of nuclear power in Britain".
	I do not necessarily want to see the end of nuclear power, and clearly nothing in the White Paper will have that effect; nuclear power will be around for a long time. However, I wonder whether £2.1 billion has been earmarked for that purpose.
	My other question concerns the protection that taxpayers will have in relation to the operation of the amended schedule. How can we safeguard taxpayers' money and prevent it from being given to a private company that has mismanaged its affairs and consequently has to go into administration? Will taxpayers' money used to manage nuclear liabilities be ring-fenced within such a company so that, even if it goes out of business, there is still money to pay for the clean-up of the end of the nuclear fuel cycle? The hon. Member for Reigate suggested that that may be the case.
	This debate will go on long after the passage of the Bill. However, we ought to secure the protection of taxpayers' money. We ought to ensure that if that money is being paid to a private company, it will be used for exactly the purpose for which it was intended. In this case, that is to meet the liabilities of the nuclear fuel cycle, and the money should not go into shareholders' pockets or be used for any other purpose.

Mark Field: It is a great pleasure to speak after the right hon. Member for Rother Valley (Mr. Barron), who gave a spirited defence of his long-standing interest in the energy industry, and the hon. Member for South Thanet (Dr. Ladyman), who suggested that, by voting against Second Reading, we would be voting to write off the whole nuclear industry.
	It seems that there is no problem so big that a good dose of Government intervention cannot make it worse. Although I accept that, from the Minister's point of view, it is prudent to plan for all eventualities, and that the Bill is obviously the result of such planning over recent months, no one should be deceived. This is wholesale renationalisation of the business, or at least the first and most important step towards that.

Simon Thomas: It is an expensive way of doing it.

Mark Field: It is indeed. There is a great fear among Opposition Members that this may become Railtrack mark II and that the taxpayer will effectively be asked to sign a blank cheque. The Minister will remember that, on that long ago day in October 2001 when Railtrack was reorganised, to put it at its most euphemistic, it was said that no taxpayer's money would be spent, and of course we have seen the results of that in the intervening 15 or 16 months.
	I shall canter through a quick history of the UK energy sector. I accept, as I am sure that the right hon. Member for Rother Valley does, that there has been rapid change in the past 50 years. In 1950, we relied on coal for about nine tenths of our energy, and roughly one tenth came from crude oil. Gas, high-grade oil and nuclear power were not even a gleam in anyone's eye. Now, 43 per cent. of energy comes from gas, 32 per cent. from oil and only 15 per cent. from coal. We may not be sure about the route that we will take in the next half-century, but one thing that we can all be sure of is that there will be rapid change in the energy sector. I suspect that, whether or not Liberal Democrat councillors get in the way, the hon. Member for South Thanet is right to suggest that wind power will not be the answer to all the UK's problems.
	More recently, the energy review has tried to envisage what energy policy we will have in 50 years. There is a fallacy of over-prescriptive planning, and one has to consider the law of unintended consequences, which all too often rears its ugly head in any planning that promotes one sector over another. I greatly fear that, in giving this Bill a Second Reading and giving a thumbs-up for the long-term future of nuclear energy, which intrinsically I support, we will distort the whole energy market. It will be interesting to see how the energy White Paper, when it is eventually published in late February, early March or even a week or two later, is integrated with the Bill.
	There is widespread acceptance of certain beneficial impacts, both economically and environmentally, of the changes that have taken place in the past 10 or 11 years. The hon. Member for Preston (Mr. Hendrick) hit the nail on the head when he said that there had been a sea change in thought about environmental issues in the past 12 or 13 years, particularly in relation to greenhouse gases and global warming.
	The changes in the 1990s, both under Conservative Governments and more recently since Labour was elected in May 1997, have reduced the cost of production as a result of the liberalisation of the market. Wholesale reductions in the cost of raw materials have fed through to the consumer. That has led to a reduction in UK fuel poverty, which was a large-scale problem discussed by many only 10 years ago, but it has not been in the headlines in more recent years. We have also seen a switch from coal to gas, which has allowed us to achieve many international environment targets.

Madam Deputy Speaker: Order. I remind the hon. Gentleman to return to the Bill's content.

Mark Field: I shall indeed. I apologise.
	There is little doubt that one problem in the electricity sector is the precipitate fall in wholesale prices, down 40 per cent. since 1998 as a result of misguided pricing policies and over-building. That created a generation capacity 22 per cent. higher than required, to which hon. Members referred. The role of NETA, the new market clearing system, accelerated the worsening position since 2002. The fallout in the increasingly international energy market has also been a problem. We fear that that is not over and that British Energy is at the forefront of the financially embarrassed market.
	What is the right way forward? We all agree that there are problems. We need a concerted strategy, not just as an Elastoplast for the stage that we are considering, but as something that plans for the years and decades ahead. British Energy provides about 20 per cent. of the UK's electricity, with more than 5,000 staff and 15 of the 31 nuclear reactors. The precipitate problem that began only last August, with the shutdown of new plant owing to the probe over a fault, led to a run on the British Energy share price, which lost a third of its value almost overnight. That resulted in the financial position turning down from the already precarious to the somewhat ugly. At the end of 2002, creditors were owed £1.26 billion.
	Even the Department appreciates that the introduction of NETA opened up competition between operators and helped to drive down prices of wholesale electricity. That would not be such a problem but for the fact that British Energy has no retail business on which it can rely. After the warnings of insolvency, which Conservative Members espoused as recently as September, the Secretary of State assured us:
	"There's no question at all of taxpayers writing a blank cheque to British Energy and its shareholders".
	That assurance seems hollow in the light of the Bill, which will probably go through tonight, and any action consequent on it.
	Last autumn was characterised by the extension and increase of British Energy's financial support package. The blank cheque rose in value from £410 million to £650 million to provide working capital because of its shot-through balance sheet. Even the Bill can only take effect to the extent permitted by the European Union state aid rules. We may not have heard the last of that. My hon. Friend the Member for Stone (Mr. Cash) tried to address the problem in a point of order before the debate. I suspect that we will return to it on Report next week and later. It is of great concern that the papers will not be given to the Commission until March, by which time there is a risk of the package falling apart. The Minister will know that the Commission has reportedly launched a new investigation into British Energy after its request to local councils to defer business rates. There is the suggestion that that falls foul of state aid provisions.
	We are gravely concerned that the Bill amounts to unnecessary Government intervention. It is anti-competitive and, by exposing the taxpayer to an unlimited and uncosted liability, there is a risk that it will not be in the public interest. Specifically, it is clear that British Energy will not enjoy fair trading until proper account is taken of the true effect of the climate change levy. Given the absence of carbon dioxide emissions, the proper account should be nil. Although I am instinctively supportive of measures that will improve the global environment, the Government have all too often allowed the environmental tail, in the form of the climate change levy, to wag the energy dog. Their policies, as highlighted by the Bill, make neither economic nor environmental sense.

Paddy Tipping: The Bill is both a response to, and a reflection of, an energy sector that is changing massively and quickly. It gives the Department the tools to respond flexibly if we need to restructure British Energy or if it goes into administration. Conceptually, I support the approach, but it is important to view British Energy's problems against the wider energy difficulties, as the hon. Member for Cities of London and Westminster (Mr. Field) said. It is not just British Energy that faces problems. Enron, AES, T"U and even the coal producers, UK Coal, face problems in a rapidly changing energy market.
	As a reflection of how quickly the energy market is changing, let me take the Minister back to the performance and innovation unit energy review published last February, less than 12 months ago, in which it said:
	"Because nuclear is a mature technology within a well established global industry, there is no current case for further government support."
	Things have changed fairly radically in the space of a few months and I predict that they will change radically again.
	To enable us to discuss the Bill, we need to consider the problems arising from British Energy. Hon. Members have referred to the climate change levy, the nature of the contract with BNFL and the effect of NETA on British Energy. It is important to acknowledge that the management of British Energy should shoulder a good deal of the blame.
	British Energy has not responded to a changing energy market. It attempted to widen its generating base by buying Eggborough at the cost of about £500 million, which was perhaps not the best of investments. It acquired and sold SWALEC. When other energy companies were trying to integrate vertically, British Energy was going in a different direction. Over the years, for the majority of its life, British Energy has consistently paid out special dividends. It has been a good earner for shareholders until now. It is important to focus some of our attention on the failure of the management at British Energy. In technical engineering terms, the management have been good, but they have been pretty poor in responding to market signals.

Robert Smith: Surely the great danger is that, if the market is not allowed to take its course with British Energy, people will wonder when the Government will intervene in other sectors.

Paddy Tipping: That is a problem. Hon. Members have different views on British Energy and legitimate arguments to make. The point is that we have an asset with an income stream. It is important to consider how we make best use of that. Some hon. Members argued that it is important to close and decommission the plant as quickly as possible. Others offered a counter-voice and argued that perhaps we could extend the plant safely beyond 2020. The intervention in the market will have consequences that I want to spell out.
	The cost to the taxpayer looks immense, with a £650 million loan. I acknowledge that it is only a loan, but whether we will see a return on it is a different matter. The key issue is the commitment in the proposal announced on 28 November of £150 million to £200 million a year for perhaps 10 years for liabilities. Some people will ask whether that immense cost is fair in market terms, and I am not entirely sanguine that the Commission will nod the agreement through. There is a case for it going through, but serious doubts and reservations remain. The Minister will know about some of them, and will have heard voices in the coal industry acknowledging that, while it has received £130 million under the coal operating aid scheme that ended at the end of the year and will receive further help from a new investment aid scheme, those sums are not on the same scale as those received by the nuclear industry. My right hon. Friend the Member for Rother Valley (Mr. Barron) talked about the problems at his colliery in Maltby—there are expectations that the Government should intervene in a big way.
	We are about to experience a step change or a conceptual shift in energy policy: we are about to move from a free-market approach to one where we need to set a framework for energy policy. Our discussion of the Bill and British Energy's policy must therefore be set in the context of the White Paper, which draws on the PIU report. That report is good on questions, but not very good on answers. One problem caused by the delayed publication of the White Paper is that we are not sure what the answers will be. However, the introduction of a set of energy proposals is inconceivable without nuclear having a role to play. I guess that our energy proposals will focus on affordability, diversity of supply and environmental aspects. Nuclear clearly has a role in those three propositions, and will continue to play a role.
	On security of supply, there has been a just discussion about the amount of generating capacity. There is too much, but it would not be sensible to take nuclear out in one go. It is more sensible to allow it to decline over a period and introduce a series of measures to build renewables.

Michael Clapham: My hon. Friend suggested letting nuclear energy decline over time. Will he clarify whether "decline" is a euphemism for phasing out?

Paddy Tipping: As things stand, there is no future for nuclear energy. The private sector has never replaced nuclear with nuclear and will not do so until the distant future when we have resolved the issues about decommissioning, disposal and liabilities. There is a strong argument for building a renewables base while nuclear declines. There are great challenges for renewables, as we must achieve a 10 per cent. target by 2010 and one of 20 per cent. by 2020. At the moment, 3 per cent. of our energy comes from renewables, much of it from traditional hydro. Many planning applications for wind farms have been withdrawn. In fact, two thirds do not see the light of day.

Madam Deputy Speaker: Will the hon. Gentleman not stray too far into general energy policy?

Paddy Tipping: I shall ensure that I do not, Madam Deputy Speaker. I am making the point that the Bill is necessary because we need a rescue package for British Energy if nuclear is to develop in future. Our balanced and diverse energy supply should not be dependent on renewables and gas. The PIU report said that 80 per cent. of our energy could come from gas by 2020, and 90 per cent. of that would be imported. If we want a balanced energy policy, it is important that British nuclear energy has a role and that other sources of supply are maintained. Many environmentalists dismiss nuclear as a dirty fuel. There are genuine environmental problems with disposal but, on the plus side, nuclear gives rise to minimal emissions.
	My final point relates directly to the Bill and the money that the Government have made available to British Energy. That involves an immense cost, and one of the step changes that we are contemplating may be about moving away from the notion of cheap energy. Wholesale prices have fallen by 40 per cent. but the knock-on benefit for the consumer has not been nearly as great. With the promise of extra money from the Government and taxpayers, should we not reflect on whether the days of the cheapest energy supply are over? The Bill deals with that problem, and I very much hope that we will develop the issue and discuss it again when the White Paper is published.

Andrew Lansley: I am glad of the opportunity to contribute to our debate and follow the hon. Member for Sherwood (Paddy Tipping), who made a useful contribution. Interestingly—I hope that this is still the case when I finish my speech—everyone who has spoken has added to our debate, not least in the form of information and ideas. The hon. Member for Twickenham (Dr. Cable) was generous about me—I suspect that my knowledge of the subject is not as great as it ought to be—and I shall try to follow that precedent. The hon. Member for Ochil (Mr. O'Neill) and members of the Select Committee have wrestled with aspects of the subject and related matters during the course of our inquiries, including the security of energy supply, so we have something to offer.
	I shall treat one or two things as read, even if they are the subject of further debate in the House. First, as the hon. Member for Sherwood explained, British Energy contributed to its own downfall, because it did not adjust to market circumstances sufficiently, nor did it secure vertical integration to capture the remaining benefits of consumers' willingness to pay for electricity. It bought and sold SWALEC, and bought Eggborough on a basis that was not as commercially advantageous as it might have hoped. As the Minister said when he appeared before the Select Committee, it did not enter early advantageous long-term contracts, given that it is a base-load supplier of the national grid. It therefore contributed to its own downfall, and I am not seeking to excuse it or bail it out.
	I may sometimes go a little further than the Minister, but we may share common ground as I do not blame the new electricity trading arrangements for the problem. If we were to turn the problem round and say, "Fine, let's not have NETA", what would be the consequences? If they were higher prices for consumers, they would have no intrinsic merit. If, in the long term, consumers have to pay higher prices because environmental objectives must be met through the extension of renewables, carbon-free emissions and so on, that would be a rational basis for proceeding. If consumers have to pay higher prices because the way in which the market operates means that the highest-cost producers disappear and the margin between overcapacity and supply is better balanced, that would be acceptable. However, the worst possible reason for changing NETA would be the lack of commercial success of operators who are uneconomic or who have failed to adapt to a market-led system. Intrinsically, we should move towards a liberalised system. The shareholders in British Energy should to that extent have no complaint. The company was privatised into what was intended to become progressively a more liberal marketplace.
	The Minister made it clear in reply to me that we will not see the energy White Paper before the Bill passes through this place at least—I do not know about the other place. That is regrettable. It would have been better to have seen it at the same time in order to set it in context. At least the Minister told us that nothing in the White Paper would fundamentally change the economics of nuclear generation, because if there were such a thing it would change the economics of British Energy's generation.
	Had the Minister not done so, I would have gone on about the climate change levy and its impact on the economics of British Energy's electricity generation. The Minister knows that the levy could make a difference of 0.4p per kWh—£4 per megawatt-hour. Irritatingly, everybody is talking in pounds per megawatt-hour, but I think in pence per kilowatt-hour. However, I think that we can manage. It is curious that the Minister said that it was illogical that the Government should give financial assistance with one hand and take it away in the form of tax with the other, given that the Government propose financial assistance on one hand and impose the climate change levy on the other. I do not see what is so logical about applying the climate change levy to nuclear generation, and so illogical about applying tax. They seem almost the same.

Simon Thomas: I followed the hon. Gentleman's persuasive argument in favour of the market. He now seems to be suggesting some double distortion in favour of nuclear, and that the industry should benefit from not only the grant, loan or whatever is in the Bill, but the removal of the climate change obligation, which all other electricity producers apart from those of renewables must meet. Surely that would also be distortion of the market. We must be careful not to replicate the old pool arrangements, under which the base load rewarded nuclear and the shareholders benefited from it.

Andrew Lansley: I shall come on to discuss the financial assistance. I did not mean to go on about the climate change levy, but it depends what the levy is for. The Minister would say that it is to stimulate energy efficiency, but if that were the principal purpose, surely one would apply it primarily to the domestic rather than the industrial sector. As he told the Select Committee, the industrial sector has seen a 62 per cent. increase in energy intensity, compared with only about 6 per cent. in the domestic sector. The climate change levy is in truth a tax, the ostensible purpose of which is to reduce carbon emissions. If so, it does not make sense to apply it to nuclear. That is not a distortion; it simply means not applying it to those who should not pay it.
	The question that I want to reach before time elapses is, what does one do? The Government were clearly right to make finance available in order to forestall what would otherwise have resulted in administration and damaging financial consequences—in relation not least to the north American assets—as set out by my hon. Friend the Member for Reigate (Mr. Blunt). Having done that, the Government need to think about the longer term.
	Although the hon. Member for Twickenham tried manfully to work through the numbers, he was still somewhat confused. We are dealing on one hand with the liabilities associated with past generation, which the Government, effectively, intend to remove from British Energy, except to the extent that it will be able to generate cash resources to help meet them. On the other hand, the costs associated with managing the waste from current and future generation and the resultant decommissioning must also be met at some point. The hon. Gentleman more or less said "Why don't we just meet them in the next few years? At present net value, that would cost us only £1 billion." That is £1 billion that we do not have to spend. The figure could be £1 billion or £5 billion; I do not know where it is between the two.
	One cannot compare that £1 billion with the £2.1 billion that the Government have talked about as the net present value of historic waste liabilities, because they are different liabilities. The hon. Gentleman seemed to suggest that the Government pay the £2.1 billion and the £1 billion, and also that we do not have the electricity generated by nuclear power stations—which is a substantial part of our security of supply and greatly reduces our carbon emissions. What is the logic in that? It is environmental and financial nonsense.
	What is in the Bill, and is it sensible? Up to now, the Minister and I might not have parted company, but at this point we do. Clauses 1 and 2 include an option for the Government to acquire shares in British Energy and, if necessary, to renationalise it. By doing so, the Government are opening up shareholders and future bondholders to the opportunity, from their point of view, of everything being handed back to the state if it all goes wrong.
	The Minister may say that everything will be handed back anyway, but we should not make it that easy. The plant would not be shut down. The assets, not the company, should be handed over to the Government. In the event of the failure of British Energy, the result would not be renationalisation but simple failure. If the Government are to accept responsibility for the long-term liabilities, they must be prepared—just as the Liabilities Management Authority will have both responsibility for liabilities and control over the assets—to accept the transfer of the assets, but not the company.
	Does that mean that there should be no legislation? I shall vote against the Bill because, owing to the risk of nationalisation, there is no cost incentive for British Energy to achieve what should be achieved in the private sector: driving down costs and responding to markets and market opportunities. There should be a Bill—perhaps alongside the forthcoming Bill on the Liabilities Management Authority, as it takes a similar approach—comprising of part of clause 1, not clause 2, and certainly clauses 3 and 4, as it might be necessary to extend financial assistance. The presence of the nationalisation provisions make this Bill fundamentally flawed.
	Even if the Government go down this path, I am far from convinced that they have chosen the most advantageous mechanism for the taxpayer concerning British Energy's contribution to the costs of waste management and decommissioning. The House will remember, not least from what the hon. Member for Twickenham said, that some of the bond issue is to be transferred into a fund, and that in future 65 per cent. of available cash is to help meet the liabilities. That is 65 per cent. of available cash after meeting British Energy's cash reserve position and the running costs of plant and so on. That is not the right solution. We must leave British Energy with incentives to drive down costs.
	British Energy is not the cheapest producer of energy, but it is not the most expensive by a long stretch. The hon. Member for South Thanet (Dr. Ladyman) might have more up-to-date figures, but last year British Energy representatives made it clear, when talking to the Select Committee, that their public target was 1.6p per kWh. If they can meet that, the company will not be far off—certainly if it does not have to meet historic liabilities—the current market price. That would make the company if not profitable at least not a substantial loss-making activity.

Stephen Ladyman: I think that I can help the hon. Gentleman. British Energy is achieving £16.70 per megawatt-hour.

Andrew Lansley: When British Energy came to see us, the figure was £18 per megawatt-hour. Even after the problems associated with Torness and other things, it is moving towards that target. I do not know what the market price is, but let us say that it is about £17 or £18 per megawatt-hour. The company is not really losing money on that basis. It cannot meet the historic liabilities, so the business is not necessarily solvent, but after the financial restructuring it might be.
	Where is the incentive to control costs? In effect, the Government are offering the opportunity for costs simply to be passed through. They will be allowed for in the mechanism. It would be much better, as in the BNFL arrangement with British Energy, for the Government to have an arrangement with British Energy shareholders to share that incentive. For example—one would have to work through the numbers—in so far as the market price went above 1.8p per kWh, the revenue beyond that point would be shared in some proportion, possibly two thirds and a third, between the Government, as a contribution to the fund, and British Energy shareholders, rather than allowing the costs to be passed through.
	That may be regarded as a nit-picking point of detail that we in the Select Committee will have to pick up and work on, but in the long run it might be important. If, as may well be the case, the price shifts to 2.2p per kWh or even higher, and if the plant continues to work efficiently, we should make sure that British Energy cannot allow its costs to escalate beyond its publicly-stated target of 1.6p per kWh. The benefit of that and the cash resources that flow from it should not subsidise inefficient quasi-public ownership of British Energy, least of all if it were nationalised. The company should have an incentive to drive down costs and deliver a substantial part of the benefit that flows from that to the Government.
	Nationalisation would be the worst of all scenarios, as there would be no incentive to control costs or to respond to market pressures. The costs would begin to move in the opposite direction to that in which they have moved in the past. The net result of my argument is not to let the company go to the wall, but to support it in a way that maintains incentive. Nationalisation has never been the way to provide an incentive.

Brian White: From listening to the debate so far, one would think that British Energy was the only company that had ever undergone restructuring. As my hon. Friend the Member for Sherwood (Paddy Tipping) said, a number of energy companies have been in trouble recently, and many companies have been through a restructuring exercise. We should bear that in mind and learn the lessons from those restructurings.
	One of the benefits of the Bill is that it gives us time to do that, and buys time for British Energy to restructure in a way that will allow it to continue to trade. The key objective is not just to keep the company going but to protect its work force and ensure that they have a role in the future of the industry. Two further objectives have been mentioned: security of supply and safety. Enough has been said about those, but it is important to reflect on the lessons of other restructurings.
	We need to consider the Bill in the light of the rundown of Magnox stations. I disagree totally with the remark of the hon. Member for Croydon, South (Richard Ottaway) that Magnox distorts the market. The crux of the matter is British Energy's business case. Does its business case stack up? I agree with the hon. Member for South Cambridgeshire (Mr. Lansley)—that is becoming a habit on the Communications Bill, on which we have had a number of debates. He makes a valid point when he says that British Energy's costs should not be allowed to get out of control. It is important that we make sure that its business case is robust. It should not be based on hidden figures, as it was under the previous management. It should be transparent. We must not repeat the strategic mistakes that were made previously.
	My hon. Friend the Minister will no doubt take that on board. The business plan must set out the proper direction. The change in the chair is welcome. The business case must be monitored and we must have assurances of its viability. The costs to the taxpayer and to the company must be controlled. The Bill gets us over the short-term hurdle and gives the business case a chance to work, but it must not be implemented in the context of the White Paper and the long-term energy market. That brings me to the role of the regulator.
	We have considerable experience of privatisation in this country. Some privatisations have been quite good and have stood the test of time. Others have shown themselves to be viable when the market is buoyant, but not through the full cycle of the market. British Energy fits into that category. We need to learn that not all privatisations have been in the best interest of the company, the country or the work force.
	We have seen what happened abroad—in California, for example, where the lack of investment and delay in strategic decision making have led to power cuts. In Scandinavia, the debate on the future of the nuclear industry has led Sweden and Finland to take different decisions about the way forward. The Bill will allow us to debate the type of activity in which British Energy should be involved as it moves forward. Others have raised the issue. It is not a case of business as usual or closure. There are choices that British Energy can make about the way in which it carries out its business and runs the power stations. That may affect the cost to the taxpayer. Once the Bill is enacted, it is important that the Government, through the regulator, engage with British Energy in a discussion about the strategic options for the operation of the power stations. My hon. Friend the Member for South Thanet (Dr. Ladyman) is right to draw attention to the economics of that, but the way in which British Energy deals with BNFL must be challenged.
	As a refugee from the Utilities Bill in 2000, I remember the debates about the new electricity trading arrangements. The hon. Member for Twickenham (Dr. Cable) is right. Many of us expressed fears about NETA at the time, but I do not recall British Energy approaching members of the Committee and saying that it had a problem. We said that the role of the regulator would be crucial to the operation of the company.
	With regard to the present Bill, I am concerned that the decisions of the independent regulator should be consistent with Government policy. I fear that the independent regulator could undermine Government policy and take decisions that cause problems for British Energy. I look to the Government to make sure that the independent regulator's decisions are consistent with the terms of the Bill.
	The negotiations about the conditions under which British Energy will supply could be badly hit if the wrong assumptions are made about market conditions or the regulator's intentions. I do not want us to be back in the same situation in a few months' time because the new management at British Energy has made the same strategic mistakes.
	As has been said, we cannot shut nuclear power stations overnight. We need to get the balance between different suppliers right. I expect, Madam Deputy Speaker, that you will tell me that that is a matter for the White Paper, and I will not stray into it, except to mention that my private Member's Bill on sustainable energy will come before the House shortly. It will deal with issues connected with NETA, but that is a debate for another day, and I will not stray into it.
	It is important that we look at how the money that we are giving to British Energy is being spent. The House needs assurances that the money is being spent properly, that it represents value for the taxpayer, that the environmental, social and energy gains are right for the country, and that if intervention in British Energy is necessary, it is done quickly, and the matter is not left to drift. One of the problems that British Energy has had in the past is that it let strategic decisions drift.
	To conclude—I appreciate that many other speakers want to contribute—the Bill will allow restructuring to occur. It will not make a difference to whether British Energy succeeds or not—rightly or wrongly, that will be down to the market and the independent regulator. In those circumstances, the Bill will give British Energy the greatest chance of success.

Simon Thomas: In the light some of your earlier strictures, Madam Deputy Speaker, I have dismissed my meticulously prepared notes, which are next to me in piles on the Bench, and am left with a couple of sheets of paper. I wanted to contribute because since I came to the House I have followed with interest the debate about the future of energy policy. I throw up my hands in horror at the fact that, three years later, we still do not have an energy policy and are debating the issues out of context, which is why we are facing some difficulty in finding our way ahead.
	One of the most startling statements in the debate was made by the Minister. It related not to the money that we are putting into British Energy in grants, loans or whatever, but to the White Paper, so I hope that you, Madam Deputy Speaker, will allow me to respond to his comments. He said that he could give an assurance that the White Paper would contain nothing to affect British Energy. That is an astonishing statement, although it may be necessary in the context of the Bill, shareholders and so on. However, it shows not only that the nuclear industry as it is currently constructed will not be affected by the White Paper, as hon. Members have pointed out, but that, because there is a liberalised energy market, the other players in it will not significantly be affected.
	That means that we are still asking the same questions that were being asked a year ago in the performance and innovation unit report and that we are unlikely to get any clear answers from the Government in their White Paper, apart from some fudging around the sides. There may be a little bit extra for renewables, combined heat and power or whatever else, but the basic construct of where energy in this country is going remains unchanged by the Bill and, in all likelihood, will remain unchanged by the White Paper. That shows that the Government have learned nothing from the fiasco that has occurred and the way in which the new electricity trading arrangements have worked in respect not only of British Energy, but renewables and CHP, even though they have not had the benefit of such a debate in the House or the introduction of their own measure.
	I do not approach the Bill from the perspective of believing in overnight shutdown of nuclear energy. I do not see on safety and economic grounds the case for any new build for nuclear energy, but I certainly agree that we cannot go for an overnight closure. We need a natural progression in the nuclear industry. As the reactors come to the end of their natural life, they should be decommissioned and we should face the costs. As we move along that path in the next 14 to 15 years, we must decide how to pay for that—an issue that the Bill partly addresses—and how we should put in place the security of supply that the Minister has adduced as one of the main reasons for introducing the Bill.
	The hon. Member for Orpington (Mr. Horam), the Chairman of the Select Committee on Environmental Audit, of which I am a member, led the Committee to Germany last year, when we looked into the future of energy needs in this country. We saw a Government who had already decided to give up a nuclear programme. They have decided not to support new nuclear Bills and have said that, as nuclear power stations reach the end of their natural life, they will be replaced not by more nuclear stations, but by a mix of other energy sources. Security of supply is therefore a serious issue for the German Government, but they are prepared to bite that bullet and address the issue thoroughly and properly.

Mark Hendrick: Does the hon. Gentleman not also remember that many hundreds of millions of pounds' worth of contracts to BNFL had to be honoured anyway? Effectively, the German Government chucked that money down the drain, as they still had to honour those contracts.

Simon Thomas: I accept that, but it was a decision for the German Government. I do not know what the contracts were worth, but I do not think that it was much more than the £3 billion that the Bill gives to British Energy.

Brian White: The hon. Gentleman will be aware that there was a strong debate last year in Finland about whether nuclear power was right or wrong. It has now decided in favour of new nuclear build.

Simon Thomas: I accept that. It is for sovereign states to take the decision. We are not discussing a European directive; such matters are part of how a liberalised energy market is run. My submission is that the failure of British Energy is significant in terms of what we should be regarding as the long-term interests of nuclear energy in this country. We can deal with the short term in the Bill, but how should we deal with the long term? How should we deal with the fact that BNFL is also in a very dodgy financial position? That is a question that must be debated for the future.
	We have already debated how we reached the current position, so I shall not reiterate the details. The Minister said in his evidence to the Select Committee that what happened was as much a failure of British Energy's management as anything else, and I shall not disagree. Nor do I think that we can put the blame at the door of NETA, although I have some problems in that regard. There are some questions about how NETA has worked in a moral vacuum with no pressure of social or environmental responsibility from Ofgem, the regulator. The shareholders in British Energy benefited wonderfully when there was a pool arrangement and the base load of British Energy was rewarded in that context, so they should not complain when they find it difficult to cope with the liberalised energy market that they knew would be introduced. That is not a matter that we should address at a legislative level, which is one of the reasons why I am disappointed with the Bill.
	The hon. Member for Reigate (Mr. Blunt) adequately demolished any significant arguments made on the grounds of security of supply. He made it clear that, if we did not take the Bill forward, we would not see the turning off of lights, as the hon. Member for Ochil (Mr. O'Neill) put it, in Scotland or anywhere else. There are processes in respect of companies such as British Energy that will ensure a continuation of supply and employment, so there is a way of addressing that issue.
	The other argument that the Minister prayed in aid—it was mentioned by the hon. Member for South Cambridgeshire (Mr. Lansley)—was that the Bill kept British Energy going and maintained an income flow into the liability fund, which would be cheaper for the taxpayer. There are two questions about that. First, we have seen no independent report about the real value of the settlement to the taxpayer. Secondly, my feeling is that we will not see much money coming from British Energy into the public liabilities fund. When the Minister winds up the debate, as I think he will do—

Brian Wilson: With the leave of the House.

Simon Thomas: I shall not object to his doing so, and I hope that he will take the opportunity to tell us what sum he expects British Energy to contribute annually to the liabilities fund, bearing in mind that the Bill allows him to put £150 million to £200 million into the historic liabilities fund. I accept that those are different funds, but they come from the same pockets.
	Decommissioning costs have also been mentioned. As I said in an intervention on the right hon. Member for Rother Valley (Mr. Barron), who is not currently in his place, we need a proper assessment of the real costs. We may face up-front costs now. That does not mean overnight decommissioning, but if we see that some nuclear closures are needed to allow British Energy to work in a competitive marketplace, we must ask how those costs can be met from the public purse. Ultimately, as the backstop is the public liability, the taxpayer will have to pay. I am not convinced that that is a more expensive option than the up-front payments of about £1.15 billion for which the Government sought the European Commission's authorisation in the Bill and the ongoing £200 million a year that can be provided for at least 10 years, which amounts to at least £2 billion. It is with regard to that £3 billion package for British Energy that we must consider decommissioning costs. That is important not in the context of year one or even year five, as this is a 10-year Bill that provides the ability to give £3 billion to British Energy.
	I agree with some of the comments of Opposition Members about the idea that the Bill introduces a type of nationalisation. It is an attempt to establish the framework for potential renationalisation. I would not necessarily philosophically object to such a policy. I did not do so in respect of Railtrack and I am not sure that I would in respect of the nuclear industry, which would possibly be safer in public hands than it has been in private hands. However, the Bill is an expensive way of pursuing such an approach. Setting up a framework involving a private company but always thinking "We'll come in and renationalise" is not good value for the taxpayer.
	In the long term, we could argue about whether nationalisation is good value for the taxpayer. My central argument about nuclear power is that it cannot be valued on the basis only of price per megawatt or kilowatt; it has to be valued on the basis of security supply and safety in particular. I am not completely comfortable with an industry that says "Let's drive down costs at all costs." We saw what happened with Sellafield and BNFL in that regard. I am more comfortable with an industry that involves a great deal of public interest, but the Bill is a missed opportunity in that regard.

Stephen Ladyman: The hon. Gentleman mentioned safety several times. In more than 50 years, the total number of deaths as a result of the nuclear power industry is fewer than one a year. In the same period, the figure for the conventional power industry is 11,300. Will he therefore stop claiming that there is a safety issue? Nuclear is the safest form of electricity.

Simon Thomas: I am tempted to take the hon. Gentleman to a wind farm site. I appreciate that I am straying, Madam Deputy Speaker, and I shall be careful. The only community-owned wind farm site in Wales is in the constituency of my hon. Friend the Member for Meirionnydd Nant Conwy (Mr. Llwyd) and is on land that is still contaminated by the Chernobyl disaster. That is the price of the nuclear industry. The wind farms that have been built on the land will not contaminate it; Chernobyl still contaminates it.

Stephen Ladyman: Will the hon. Gentleman give way?

Simon Thomas: I shall not give way again on that, and I will move on.
	If the Bill is genuinely to protect taxpayers' interests, we must consider all the options. Hon. Members have outlined them, and I shall not reiterate all the questions. The Bill as currently drafted distorts the market enormously. It is open to challenge, and I would be amazed if another energy generating company did not challenge it. The European Commission has agreed to the £1.15 billion, but the Bill is different. I should be surprised if it were not challenged in some court.
	In the context of the continuing debate on the White Paper, the Bill puts paid once and for all to the idea that we can have energy that is too cheap to meter. We should be grateful for that. The Bill acknowledges the true price of cheap energy. It is noticeable that several Labour Members have claimed that energy is too cheap. A liberalised market delivers the cheapest energy; that means the dash for gas and everything else that we have had to tolerate. I hope that hon. Members realise that cheap fuel alone cannot fulfil the need for security of supply and long-term energy. It cannot solve fuel poverty, which relates to energy efficiency and providing the best resources to the poorest people. It is not simply a matter of the price per kilowatt hour of electricity. I hope that that realisation is dawning on Labour Members. That is not apparent in the Bill.
	The Bill does not deal with the genuine, long-term costs of the nuclear industry. It does not tackle the costs that the PIU report outlines or our position in five or 10 years. The measure is a sticking-plaster solution. Sticking plasters are not safe for nuclear reactors.

Michael Clapham: I am pleased to follow the hon. Member for Ceredigion (Mr. Thomas). I agree with much of his contribution. He said that he was disappointed with the Bill, but appeared to suggest that if it were more specific about public ownership, he would be attracted to voting for it. Similarly, the hon. Member for South Cambridgeshire (Mr. Lansley) considered whether the cost of public ownership would be too dear. At the same time, he appeared to claim that the liabilities were so great that if the Government took them on, the industry could be privatised again. I do not accept that.
	The only way forward is public ownership. The hon. Member for Twickenham (Dr. Cable) suggested that to some extent. He rightly pointed out that the hon. Member for Reigate (Mr. Blunt) did not robustly oppose renationalisation in the way that Conservative Front Benchers normally do. Perhaps he accepts that public ownership of a company that has such vast liabilities is the only way forward.

Crispin Blunt: I want to ensure that I have not given hon. Members the wrong impression. Conservative Members would oppose renationalisation. Administration is a perfectly good route. The company's assets—the working power stations that generate cash and power—can be sold out of administration. The taxpayer will have the first charge on any receipts from that to meet the liabilities that the Government have taken on.

Michael Clapham: I am grateful to the hon. Gentleman for clarifying that point. Doubtless my hon. Friend the Minister has noted it.
	I appreciate the Minister's need for the Bill. I understand that the Government require such a Bill to restructure. However, rather than restructuring British Energy and having to come back to the House to discuss public ownership, I urge the Minister to consider public ownership as the first option. I hold that view because of the enormity of the liabilities, to which I shall revert shortly.
	The economic case for nuclear energy is not strong. If we consider the competition in the market before the new electricity trading arrangements, it is apparent that nuclear energy could hack it only because the pool favoured it. When I was member of the Trade and Industry Committee, we considered the proposal to privatise in 1996. It was discernible that the Tory party had decided to privatise British Energy despite removing it from the privatisation package in 1990 because the economic climate had changed. It had introduced the non-fossil fuel levy, which obliged specific suppliers to buy energy from a nuclear source, and the nuclear levy. The latter paid for the nuclear industry. The Tory Government therefore decided to privatise British Energy because the commercial position had changed.
	The position has subsequently changed dramatically. The Minister referred to security of supply and safety. We should take up those points and I hope that Opposition Members are prepared to support the Government on them. Safety has been mentioned, and my hon. Friend the Member for South Thanet (Dr. Ladyman) pointed out that only one person a year had died in a given period in the nuclear industry. However, he omitted to mention the way in which privatisation changes the safety culture. For example, contracting out and outsourcing in British Rail resulted in the employment of people who were less skilled than the previous in-house workers. That led to some of the problems that British Rail experienced and to Network Rail as a solution. Network Rail has now decided to use in-house workers for many of the maintenance jobs.
	When British Energy was privatised, there was a move to outsourcing. Only a few months ago, the nuclear installations inspectorate raised the problem of safety. Questions were asked in the House about its report. British Energy may have adjusted to that. I am not sure whether it did so by retaining payroll workers in maintenance and cutting its outsourcing, but the nuclear installations inspectorate drew our attention to it.

Mark Hendrick: Is my hon. Friend, like John Edmonds, the general secretary of my union, advocating a Railtrack-style solution?

Michael Clapham: I am grateful to my hon. Friend for prompting my memory. When the Minister considers the total picture, if he does not feel that outright public ownership should be the model, he may favour a Railtrack-type solution for British Energy. Whichever model he opts for—whether it is the public model or the Railtrack-type solution—the general public will have a greater commitment to the industry. They will feel safer if the industry is operating on a non-profit basis, so that commercial pressures tend not to subvert the safety culture. If it was in the public sector, we would see the return of that safety culture.
	Another point that I want to raise with regard to the nuclear industry has not yet been mentioned—the threat from terrorism. We know that the industry is vulnerable to such threats. Indeed, only two weeks ago the Daily Mirror probed the defences of the nuclear industry and found that it was allowed to enter sites quite easily. Will the Minister tell us whether the Daily Mirror provided him with a report of that incursion by one of its journalists on to a nuclear cartilage, and, if so, whether he will act on it to ensure that security is tightened up?
	My next point concerns liabilities. Opposition Members have suggested a number of options as to how liabilities should be dealt with. Some believe that the phasing out of nuclear energy would reduce the future liability and therefore be a saving to the overall energy economy, leaving more money available to be invested in its future. Others feel that the industry should be phased out over time, as in, for example, Holland, Germany, Spain and Sweden. I tend to favour that approach, because it would allow the industry to work to a timetable of phasing out and would enable the Government to address the issue of jobs. However, that would be better done within the context of public ownership. The hon. Member for South Cambridgeshire said that he was ideologically opposed to renationalisation. He did not use that phrase, but I think that is what he meant. If he had looked at some of the huge operators in the energy industry, especially British Gas before it was privatised, he would have seen that British Gas was described as a monopoly that operated in the public interest. If the Minister were prepared in clauses 1 and 2 to bring British Energy into the public sector, it would operate for the public interest.
	The liabilities are vast indeed. I refer the hon. Member for Reigate to the Select Committee report of 1995–96, in which we were able to see the undiscounted and discounted liabilities. The undiscounted liabilities for the PWR and for the eight advanced gas-cooled reactors, which are part of British Energy, were £10.5 billion. Discounted at the rate of 2 per cent., that liability came down to £7.6 billion. That is another matter that I should like to be clarified. A segregated fund was set up when British Energy was privatised whereby contributions were made by the company towards dealing with the clean-up costs. How much was in the segregated fund when this crisis arose, and does the Minister think that the amounts that were put into it were sufficient? Can he say whether it is the board of the company that decides on the amount of moneys that will be put into the segregated fund? Who decides the rate of discount? That is an important issue. That rate depends on the size of the fund that is to be accumulated to deal with the clean up.
	Although I am sceptical about nuclear energy, the Bill is necessary and I shall vote for it.

Andrew Stunell: I am pleased to be able to take part in this debate. I want to start by picking up on a point made by my hon. Friend the Member for Twickenham (Dr. Cable), who said that gambling analogies apply to the Bill. It allows the Minister to do anything that he likes in relation to anything that has British Energy in its title without let or hindrance and with no cash limits whatsoever. That is the plain reading of the words in the Bill. Although discussion of specific sums of money has been useful and instructive, it is somewhat beside the point. All that can be put in the wastepaper basket on the day after the Bill is passed, all the numbers can be doubled, and the Minister has the authority of the House to do that. If nothing else, that is a good reason to oppose the Bill. As my hon. Friend said, it is like the young man at the tables in Monte Carlo who sends home a message saying, "System working well—send more money." The Government are professing that all is well, but they just need a bit more money to finish it off.
	Several interesting points have been made in the debate, which has been of good quality and has shown that many hon. Members are seriously engaged in the issue. One of the issues that has been discussed is how the full decommissioning costs fall and who is to take responsibility for them. The right hon. Member for Rother Valley (Mr. Barron) argued that by the Government taking the firm over, the decommissioning costs could be paid for over a longer period from the profits made from the company. He went on to point out that the firm is running at a loss. The hon. Member for South Thanet (Dr. Ladyman) commented that the costs of production for the firm are £16.70 and the market price is lower than that. In other words, every day that it runs increases the loss—it does not allow it to contribute a profit to the fund. We therefore need to move to one of the other mechanisms that the Minister has suggested.

Brian White: The hon. Gentleman mentions the price of NETA. Is not one issue whether the regulator is taking sufficient cognisance of the whole ecology of the industry, or simply believing in a market-oriented approach?

Andrew Stunell: The hon. Gentleman makes a very good point, as did my hon. Friend the Member for Twickenham. What we need is a proper external objective assessment of the costs, how they accumulate and how they can be paid for. The hon. Member for Barnsley, West and Penistone (Mr. Clapham) made a similar point when he referred to the discount rate. A small change in the discount rate completely upsets all the arithmetic that has been discussed so far. We have heard about the £72 million per year contribution to the nuclear liabilities fund, which is very susceptible to assumptions about rates of accrual and so on, and about the £275 million contribution by way of a bond by the company.
	I draw the House's attention to the fact that my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) specifically inquired into that issue in the Trade and Industry Committee. At paragraph 37 of its report, he asked:
	"What is the credit rating of the £275 million bonds?"
	He pressed his point a couple of times and was finally told, at paragraph 39:
	"If British Energy were now to go into insolvency, the government has taken security so the taxpayer will get first call on any value."
	However, not discussed in the Select Committee was which of two civil servants would be at the front of the queue—the one wanting repayment of the £275 million bond or the one wanting repayment of the £650 million loan. The House will get to the same answer in the end—that is, those civil servants would simply be in a long list of creditors of a company essentially without value. I hope that the Minister concedes that we need that external, objective assessment with the figures agreed and in front of us.
	The hon. Member for South Thanet complained bitterly that going for a renewables generation solution could easily cost £30 billion. I do not know where he got his sums from, but I remind him that the assessment before the House of the costs of Government support for the nuclear industry so far is £55 billion. The investments would be massive in either case, but I have a clear view as to which would give the House, the country and the environment best value.
	If I may, I shall deal with a question that has been mentioned a number of times: whether the company going into administration would mean that the plants had to close immediately, causing some catastrophic loss of capacity or even safety issues to arise. A number of Members on both sides of the House have done well in rebutting that point. In particular, I draw the House's attention to what the hon. Member for South Cambridgeshire (Mr. Lansley) said about it. There will be working plants capable of generating electricity, and any administrator with a mind to maximise the return for creditors will clearly see them in operation, provided that they continue to contribute to the company's cash flow.

Mark Tami: Is the hon. Gentleman saying that there will be no difference whether the plants carry on as they are or go into administration? That is what he seems to be suggesting.

Andrew Stunell: There will clearly be an important financial difference, which I am just coming to: the Government will be £650 million better off if the plants go into administration than if they take the route set out by the Bill. There are good reasons why the Bill should fail. The key one, which the House should have regard to, is that £650 million will be available for something else in the energy industry, or perhaps beyond it.
	Members should imagine that we have before us not the Bill, but the White Paper, and that Treasury is saying to the Minister, "You have £650 million you can spend. What would you like to spend it on?" It would be inconceivable, in the context of the White Paper, for the Minister to say, "There is a drain. Let's tip the money down there, please, and forget everything else in the White Paper." For instance, £650 million would go a long way towards the planned restructuring of and compensation for those bits of the electricity generating industry that are the least efficient and which produce the greatest amount of carbon dioxide. Clearly, when one looks five or 10 years ahead, one sees large, elderly coal-fired plant, which is environmentally and financially not worthwhile.

Michael Clapham: Presumably, the hon. Gentleman is impressing on the Secretary of State the real need for investment in clean coal technology.

Andrew Stunell: I certainly accept that point, and the hon. Gentleman and I make common cause on it. This country should indeed pay attention to that technology, as well as others. My central point is that the Bill is not the priority investment in the energy industry for the Government in the context of developing an energy policy and the likely outcome of almost any conceivable White Paper that they might produce. However, it will artificially preserve a huge overcapacity in the industry and lead to low wholesale prices, although, as a number of people have pointed out, not to particularly low retail prices.
	Another reason for refusing to pass the Bill is that we are seeing a distortion of the competition in the industry. There is competition for investment in the national economy as a whole, but particularly in the energy industry, and the competition for private investment is intense. An energy generator might say to a banker, "Please lend me the odd £600 million. I want to make some money." The banker would say, "What is your business plan?" The energy generator could show the banker any conceivable business plan, but he would be unable to make any money and the banker would not provide such an investment. Such distortion is making such investment more difficult to make.
	I am impressed by the argument made by the hon. Member for Sherwood (Paddy Tipping), who thinks that the day of the liberalised market is coming to an end. I think he rather fancies returning to a somewhat Stalinist command economy. We on these Benches do not believe in that. We believe that the market has to be an important component in the development of the energy industry, and it has to be the job of the House and of any Government to set the regulatory framework in which that can take place.

Tom Watson: Is the hon. Gentleman demanding that market forces should dictate the Liberal Democrats' renewable energy strategy and saying that they will not look for any Government intervention?

Andrew Stunell: I am sorry that I was not speaking loud enough for my voice to reach the Labour Back Bench. I said that it is for the Government and the House to provide the regulatory and fiscal framework. I have talked in the House several times about the need to extend the renewables obligation, for example. However, I shall move on, as I am conscious of the time, Mr. Deputy Speaker.
	Our discussion has been somewhat handicapped by the need to set it in a wider context relating to the White Paper and the forthcoming Bill on the Liabilities Management Authority. I do not want to transgress your rulings, Mr. Deputy Speaker, so I shall say that the Bill will open the way to a failed rescue bid of the kind used throughout the 1970s and 1980s for failed industries. Such a rescue will distort the market, deter investment and delay the restructuring that is essential if we are to have a viable energy industry for the future.
	British Energy has shown itself to be a failed company in a failed industry. It paid monopoly money for Eggborough, for SWALEC and for project after project. Now, unfortunately, it seems that the Government are ready to pay monopoly money to rescue managers and investors who ought to take the rap for their misjudgments. 8.18 pm

Anne Picking: It will come as no surprise to the House to hear that I support the Bill. It is a bit rich that the Government are being left to sort out another Tory privatisation disaster. Yet again, a major utility is under threat because the Tories allowed political dogma to drive an energy privatisation agenda rather than doing what was in the national interest. It is time to sort out that sorry saga.
	A secure, stable and safe electricity supply is fundamental to our country's future. That can be achieved only through a diverse and balanced energy sector. My constituency has a diversity of energy supply to be proud of, including wind farms, coal and nuclear power. We should all avoid promoting our favourite causes and think of the big picture—a long-term, sustainable energy policy.
	This is no time for woolly thinking. The Government have set realistic, ambitious targets to work towards renewable and reliable sources of electricity, but renewable energy, combined with hydro, meets only 2.8 per cent. of our energy needs. Nuclear power produces 50 per cent. of those needs in Scotland, and 21 per cent. of national need.

Michael Clapham: My hon. Friend seems to be saying that there is a need for nuclear energy to complement and support renewable energy. However, nuclear energy provides the dearest electricity on the wires. The one industry in which we should invest in order to support renewables is the coal industry. Does she agree that we need investment in clean coal technology?

Anne Picking: I thank my hon. Friend for that, and I entirely agree. I do not know whether he knows my background, but I am a relative of Abe Moffat, well known in the mining industry, so I come from what we call "guid stock".
	We should not forget that nuclear energy produces vital supplies of electricity and helps us to meet environmental obligations by being carbon-free. When I hear ludicrous statements from hon. Members calling on the Government simply to shut nuclear power stations, I find them quite irresponsible. Apart from anything else, it would cost us much more to shut them than it would to keep them open.

Russell Brown: My hon. Friend knows, if anyone does, the difficulties that British Energy has had at Torness power station in her own constituency. Has she had any indication of what the cost would be of early closure?

Anne Picking: I thank my hon. Friend for that intervention, but I cannot pluck a figure from the sky. We are talking megabucks. I shall get back to my hon. Friend when I find out.
	We have to do away with any pie-in-the-sky notion that wind and sea power are ready to replace nuclear power. It simply is not so. That notion simply does not bear scrutiny.
	There must, then, be a future for nuclear. The debate has been very good on many levels, but I am a little disappointed that not enough hon. Members have paid tribute to the staff who work in the nuclear industry. Those staff have been the backbone of British Energy. I take this opportunity to commend those highly trained and motivated workers, who fully deserve our support. They—not the shareholders or bondholders who thought that they had a well to drink dry—have invested most in the industry. The workers, such as the 450 at Torness, have sacrificed the most in trying to save the company.

Brian White: Does my hon. Friend agree that if the management of British Energy had consulted the work force, it might not have made all the mistakes that it did in its strategic decisions?

Anne Picking: I agree.
	As well as the workers, I commend the trade union representatives who tried hard to consult with British Energy's management and to represent effectively the interests of their members. It is the workers who are reorganising and retraining. They have been doing all that they can—including shedding jobs—to make British Energy pay. Meanwhile, dividends have been paid to shareholders. We should ignore any morality calls from them about being paid compensation.
	Security of supply is not a luxury but a matter of life and death for many of our citizens. Electricity is also the life-blood of our future prosperity, affecting every one of our constituents. We quite rightly expect that when we flick a switch, the light comes on. At North Berwick high school's end-of-term Christmas dance for the older pupils, the boys put on their kilts and the girls their fancy frocks only to have the dance abandoned because of a power failure. In the scheme of things, that is not a big deal, but it was a major disappointment to those pupils.
	In essence, I support any action necessary to secure the future of the nuclear industry, including outright nationalisation if it proves necessary.

Tom Watson: This has been an insightful debate and, for much of the afternoon, the Chamber has looked like the Standing Committee of the Communications Bill in exile. Many members of that Committee have displayed their customary depth of analysis today, as they do day in, day out in that rather laborious Committee on that clause-ridden Bill.
	Most speakers have congratulated the Government on making the necessary provisions to guarantee that the country's energy supply is in good hands in the unfortunate event of British Energy failing to secure agreement on its restructuring. The hon. Member for Ceredigion (Mr. Thomas) was a bit harsh on my hon. Friend the Minister when he said that security of supply had been blown out of the water as a motive for the Bill. It is important that management failures are not allowed to undermine the ability of households and businesses up and down the country to know with certainty that the lights will stay on and workers to know that they have a secure future.
	This is a pragmatic Bill that takes a pragmatic approach, a stark contrast to the dogmatic approach that led the last Conservative Government into a rash, ill-informed and, as we can see now, unsuccessful privatisation; one that most City commentators at the time, and nearly all City commentators now, agree was perhaps an ideological step too far.
	The Bill is not about turning back the clock; it is about being prepared for any eventuality. If British Energy can secure agreement for the restructuring proposal from its bondholders and creditors—I hope that it can—the Bill will be unnecessary. British Energy will be able to continue as an ongoing concern, generating electricity rather than column inches and debates in the Chamber.
	I understand that real progress is being made in bringing bondholders and creditors together to reach an agreement on the restructuring. The detailed information that bondholders have required from the company has only been available since just before Christmas. It is understandable that those involved have been racing to reach an agreement and we must pay credit to them, as they are genuinely trying to reach agreement by the deadline of 14 February. I am not opposed to that but, in that eventuality, I hope that Adrian Montague, the company's new chairman, and the major investors will look to reorder and strengthen the clearly tainted British Energy management.
	My hon. Friend the Member for East Lothian (Anne Picking) mentioned the hard work of the 5,000 workers in British Energy, and there is no doubt that their morale has been sapped over the last 12 months by the uncertainty that they all face. It is essential that we put pressure on the company to bolster its management, because the previous management was, at best, incomplete in its dealings with stakeholders and, at worst, simply misleading.
	If British Energy cannot secure the agreement, it is absolutely right that the Bill will allow the Government to incur expenditure through a range of measures to ensure a "smoother path through administration." Let us not forget that the company does not have to nestle in the public sector for long. The provision of loans or grants may allow for the possibility of a new ownership structure to evolve. In that event, I hope that stakeholders look to recent successful not-for-profit models, as it need not be a wholly public sector solution.
	When I talk about not-for-profit models, I am talking about Welsh Water, Britain's fourth-biggest water company. It is a good model to look at; it provides an essential public service, delivered in the private sector by a company without shareholders. Instead, bondholders fund the company. It makes a profit, but that profit is reinvested in the business, in training staff and in lowering bills for customers. I say to my hon. Friend the Minister that if things go wrong for British Energy, that would not be a bad model for the Government to look at.

Russell Brown: I am intrigued by what my hon. Friend is saying, but I am slightly confused. Could he elaborate on the point that he is making?

Tom Watson: Indeed. Having dealt with failed Tory privatisations, the Government have learned that we do not have to have wholly public or wholly private organisations. The Network Rail model is one we can look to.
	I say to my hon. Friend the Minister that if it were down to the work force—those 5,000 employees we have mentioned—and their normally moderate unions, they would demand that the Government take control of the company today because they have faced such uncertainty for the past six months.
	For too many years, the work force also faced uncertainty on safety. After the damning report on operating safety at British Energy issued by the World Association of Nuclear Operators two years ago, I understand that the management briefing notes that accompany presentations to safety representatives at BE are considered too embarrassing to share with the trade unions. Can my hon. Friend the Minister urge the new chairman of the company to release that important safety information to union representatives?
	The question to which employees and consumers most want an answer from my hon. Friend the Minister is: how did we get into this situation? The answer is easy: first, Tory dogma and, secondly, constant mismanagement at the highest levels of British Energy. Hon. Members have laboured that point but it is worth remembering, as Parliament, once again, debates a failed privatisation, which is, like Railtrack, a privatisation that Labour Members warned against at its inception.
	We are looking for new models. As has been said elsewhere, it is no coincidence that these problems surfaced in the two companies that were the last to be taken to the market during the final, frantic, befuddled death throes of the previous Conservative Government. In effect, the British Energy privatisation amounted to a massive gift from the taxpayer to the private sector—

Andrew Robathan: Oh, really.

Tom Watson: Yes, really. British Energy was floated for £1.5 billion.

Dave Watts: Does my hon. Friend agree that if the previous Conservative Government had been local councillors they would have been surcharged? Many of the Tories who now sit on the Opposition Benches would have been paying the taxpayer compensation for a long time.

Tom Watson: Indeed. I have some figures for Opposition Members. British Energy was floated for £1.5 billion—a sale package consisting of seven advanced gas-cooled reactors and Sizewell B, which itself cost £3 billion to construct. The market capitalisation of BE is now below £100 million, making it one of the biggest write-offs in Tory privatisation history. At the time, concerns were brushed aside.

Crispin Blunt: The hon. Gentleman cannot have it both ways. Either the shareholders have taken an enormous bath and should never have bought the thing in the first place, so encouraging shareholders to buy the company was a thoroughly good deal for taxpayers, or the company is subject to the vagaries of the market. He cannot say that simply because the company is now worth only £100 million privatisation was a disaster for the taxpayer—plainly it was not.

Tom Watson: I agree with the hon. Gentleman. It is perhaps unique that the Conservatives managed to hit the taxpayer hard when they privatised the company and then undermined the shareholders by nearly bankrupting the institutions that invested in it.
	At the time, concerns were expressed to the then Conservative Government in powerful contributions from my hon. Friend the Member for Cunninghame, North, now the Minister for Energy and Construction, and my right hon. Friend the Member for Derby, South, now the Secretary of State for Environment, Food and Rural Affairs. During those debates, one of the most prominent cheerleaders for privatisation was the hon. Member for Castle Point (Bob Spink)—although he has been noticeably quieter on the subject of late. He made the perceptive prediction that
	"the key benefit is that privatisation would impart to the nuclear industry the ability to make decisions to benefit the industry".—[Official Report, 26 March 1996; Vol. 274, c. 859.]
	With the benefit of hindsight, I have been trying to work out what the industry gained from that privatisation, but I cannot find many benefits at all.
	Much has been made of the impact of NETA on the company and there has been some discussion as to whether that was a major factor in BE's problems. Many Members have pointed out that BE did not complain about NETA; in fact, the company welcomed NETA and said that the new arrangements were good, yet it failed to adapt to the new market conditions.
	The company failed to take a natural hedge in the market to offset the sharp fall in prices. When everyone else was moving into retail distribution, BE was moving out of the retail electricity sector—just as others in the industry began to understand the benefits of vertical integration. Furthermore, the Eggborough plant, purchased for more than £600 million, is now reckoned to be worth only about £75 million or £100 million.
	Those are all problems of senior management in British Energy, but the continued payment of handsome dividends, even as the storm clouds gathered and the company was dusting down its begging bowl, was a scandal. Last year, just months before the company turned up cap in hand at the DTI's door, it handed almost £50 million back to shareholders. The £500 million special dividend payment that it made in 1999 was an act of breathtaking complacency, and the excuse was that the money was not needed, as there were no immediate acquisitions to be made. That money would have been better used preparing for the company's many rainy days.

Crispin Blunt: rose—

Mark Hendrick: Will my hon. Friend give way?

Tom Watson: I had better take the intervention from the shadow Minister first.

Crispin Blunt: I am grateful to the hon. Gentleman, but he suggests that he will go into the Lobby tonight to support a Bill that will enable the Government to come to an arrangement whereby the taxpayer will help out the existing company's shareholders and bondholders. That is a rather surprising argument.

Tom Watson: No, I will go into the Lobby to allow the Government to take on board any eventuality that the company faces. I apologise for the fact that we need to have this debate. As I tried to suggest earlier, even Mrs. Thatcher perhaps noted that this was a privatisation too far, but, as the hon. Gentleman has said, he was not a Member at the time, so he took no responsibility for the previous Government's decisions—a "not me, guv" attitude. So the Government are taking measures to deal with any liability.
	However, as has been mentioned, the liabilities that we need to take on board are those of radioactive waste. The nuclear equation must not be forgotten as we discuss the industry's restructuring and, more widely, the United Kingdom's future energy mix, which we are not allowed to talk about now. So I will not talk about the energy White Paper, but perhaps the Government can learn a lesson from this privatisation about the other sectors of the industry that are considering restructuring—principally, Nirex.
	I have pressed the Minister before on the fact that perhaps Nirex should be an independent foundation, divorced from ownership of British Energy and BNFL. I know that he will not tell us tonight about his future plans for Nirex, but I hope that he can rule out the ugly rumour, which is going around the nuclear industry, that Nirex will be privatised. The lesson of this debate is that, if we go down that route, we will find ourselves in a greater mess in years to come.
	This is a good, pragmatic and flexible Bill. It is a Bill that we do not want to use if we can get away with it, but I hope that hon. Members will support it in the Lobby tonight.
	8.38 pm

Mark Hendrick: Whatever is said about British Energy, there can be no doubt that it is an extremely important industry. As many hon. Members have said, it provides about 22 per cent. of the United Kingdom's electricity capacity. Given that it provides such a huge amount, even with 20 per cent. overcapacity, it is essential that that capacity remain available for two reasons. First, demand for electricity may increase. Secondly, it is important that capacity is spread over as wide a range of different sources as possible. It is clearly important that we reduce carbon dioxide emissions into the atmosphere and that, if a certain part of the industry hits problems, there is still the capacity for other parts to make up the gap. The industry's importance to the whole economy is phenomenal, and I would be very sad to see such an important industry go to the wall.
	The risks of letting the industry go under must not be underestimated, and I commend the Government for bringing the Bill forward, first, to take account of the current financial difficulties, and, secondly, to make available provisions that might not be necessary but that will provide a safety net should the worst come to the worst. Let us not forget why we are here in the first place: a botched privatisation was rushed through in 1996 by a Government who were trying to get as many measures as possible on to the statute book before a general election that they knew that they were going to lose. The industry was privatised and raised £1.3 billion.

Russell Brown: Does my hon. Friend suggest that that was akin to a scorched earth policy?

Mark Hendrick: Perhaps I would not use that description, but I can see its merits.
	As I said, £1.3 billion was raised. What was the market capitalisation in March 2000? It was £1.2 billion. In 2001, the market capitalisation rose to £1.8 million. [Hon. Members: "£1.8 billion."] I stand corrected. It was £1.8 billion. In 2002, it went down to £1.114 billion. On 11 January this year, its capitalisation was £39.9 million. Those figures speak for themselves in terms of the management of that company since privatisation.
	It is essential that the company receive financial assistance. We cannot afford to switch off that essential capacity. As my hon. Friend the Member for West Bromwich, East (Mr. Watson) mentioned, something like eight nuclear power stations are currently involved, and the implications of even switching off the core of those reactors, as the hon. Member for Twickenham (Dr. Cable) suggested, are phenomenal. He said that the cost would be something to the tune of £600 million. Given the scale of the figures that we are talking about, that might not seem a great deal of money. However, decommissioning nuclear power stations is not just a question of stopping the core reactor generating electricity; it also involves the disposal and dismantling of the reactor facilities as a whole.

Albert Owen: Does my hon. Friend agree that one factor that has been overlooked in relation to the shutting down of British Energy power stations is that many of them have contracts with other industries, which may have a knock-on effect not just on price but on jobs in those industries?

Mark Hendrick: Yes. I have not dealt with the jobs issue yet, but what my hon. Friend says is correct. What the hon. Member for Twickenham failed to take into account, apart from the jobs issue, was that those problems were never going to go away. Just because we spend £600 million today does not mean that the rest of the costs associated with decommissioning will not be around for future Governments. It is important to factor in those issues.

Vincent Cable: Is the hon. Gentleman aware that, of the £5 billion decommissioning costs, about £2 billion would be incurred after 135 years, and another £2 billion after 50 years? Clearly, those long-term commitments have to be factored in, but they hardly make any difference as to whether the plants are closed down in five years or in another 15 years at the end of their natural life.

Mark Hendrick: Again, I beg to differ with the hon. Gentleman. Apart from the loss of jobs, there would be a loss of revenue and of electricity generated as a result of the plant ceasing to operate. From that point of view, it was interesting that one of the Welsh nationalist Members who spoke earlier referred to Germany. Germany took the worst option of all, which was to pay the cost of the contracts and close the industries, too.

Stephen Ladyman: Before my hon. Friend gets too bogged down with the Liberal Democrats, does he recollect that the last time that we debated energy, they said that we should not build any nuclear power stations because we did not know how to decommission them? Today they tell us that we should not build any more because the ones we have should be decommissioned. The truth is that, as on so many issues, they do not know whether they are on foot or on horseback.

Mark Hendrick: My hon. Friend makes a very good contribution.
	Clause 1 provides for financial assistance in the short term and gives the option of acquiring the company or its assets if the solvent restructuring fails. The Government have stressed that this is an enabling Bill and that there is no agenda other than to try to restructure the company and get it up and running. I mentioned in an intervention a possible Railtrack-style solution, as John Edmonds, general secretary of the GMB, put it. I give the Government the benefit of the doubt with regard to this approach. There is still the possibility that more restructuring of the industry would not make it more profitable or self-sustaining than it is now.
	There are two conflicting approaches to the provision of electricity in this or any other country. With a totally market-led approach, it stands to reason, because of the very different ways in which the energy is derived and then distributed, that not every method would potentially result in the same costs.
	Similarly, if one believes in an energy policy that is diverse and draws from a number of sources, it is clear that some sources may be more profitable than others, and that therefore certain types of industry, as we have already seen from renewable industries, would need extra support in the form of derogations from the climate change levy or taxes to rebalance the market. The Government should enter into discussions with the European Commission to see how that matter can be examined, because a totally market-driven approach does not necessarily mean a fair market. It can be a distorted market, as my hon. Friend the Member for South Thanet (Dr. Ladyman) put it. In fossil fuel generation of electricity, there are associated costs that are not immediately paid for. In fact, the environmental costs of those industries probably compare with the environmental costs of the nuclear industry, if everything is taken into consideration.

Mark Tami: I completely agree with my hon. Friend. If matters are left totally to the open market, we shall not have a balance: we will not have nuclear or renewables but a short-term system based on gas turbines that will probably burn imported gas from unstable countries.

Mark Hendrick: I absolutely agree. When the decision was made to allow gas to be used in generating stations I was one of those who thought that it was somewhat of a disaster, because gas is very precious. There should have been a continued emphasis on coal, with new technologies to work with it alongside the generating capacity that was there—

Mr. Deputy Speaker: Order. The hon. Gentleman is again straying from the main subject of today's debate.

Mark Hendrick: I apologise, Mr. Deputy Speaker. It is just that, in determining the true costs of nuclear power, to determine whether a nuclear power industry is viable, to some extent we need to look at the alternatives, because obviously there are implications. But I will not stray any further in that direction.
	Britain's nuclear power industry has developed from a programme that originally had military imperatives into one with political imperatives, leaving us with what is, by its very nature, an expensive means of producing electrical energy. During the debate in the 1980s, cost per kilowatt-hour in comparisons between coal and nuclear power was based purely on the operating costs of each means of generating electricity. I put it to the Minister that £16 per megawatt-hour, which is the lowest cost of production nowadays, is probably not the real cost, for the reasons that I mentioned earlier. Research and development costs for nuclear facilities and waste management and disposal were never factored into the equation for operating costs because the industry was Government-owned and not subject to market scrutiny.
	As other Members have said, the privatisation in 1996 was a give-away, and it should never have taken place because the industry was never going to meet, and beat, the competition from gas. British Energy, like Railtrack, has put shareholders before consumers. Last May, it had a profit of £42 million in its British and north American operations, but an overall loss to its UK operations of £41 million. None the less, the company chose to maintain its dividend, paying out nearly £50 million to its shareholders. Last year, when the company had already recorded large losses of over £500 million, the chief executive was awarded a performance bonus, and is now being offered a fortune. Given the dividend, which was clearly a bribe to keep the chief executive in his job, and his bonus, it seems that the company is paying itself for under-performance.
	Despite that, it is essential that BE continue to produce electricity and that this country develop a viable nuclear power programme to meet our international obligations on climate change. The switch-off of all eight stations would cost more than letting them continue to run. They need upgrading, and, in time, the Government will need to consider new build. Safe nuclear power is the future, and it must be part of an overall balanced energy policy with a mix of sources.
	While the single European market in energy continues to develop, it is plain that a purely market-driven energy policy will not respect the environment, just as the coal-generating industry failed to respect it before scrubbing technologies were introduced. The Government should work with the European Commission to consider how nuclear generation industries throughout Europe can be assisted in coming years. Wind and waves are okay, but they will never produce 20 per cent. of this country's electricity, and they would do well to reach 10 per cent. The nuclear industry has the capacity, and it is an essential part of this country's electricity generation programme.

Russell Brown: I am pleased to be able to contribute to the Second Reading of this enabling Bill. My hon. Friend the Member for West Bromwich, East (Mr. Watson) said that he thought the Chamber was full of exiles from the Standing Committee on the Communications Bill, so I take it that there are difficulties in that Committee. I suggest that tomorrow he pop along to Room 14, where the Hunting Bill will be discussed, and then he will see real difficulties.
	The Bill focuses on the current problems for British Energy. Hon. Members on both sides of the House have made a variety of observations, but a common thread that runs through the debate is that the decisions of the company's management have greatly contributed to its downfall. We have heard about the spent field contracts with BNFL. Signing contracts has done nothing to assist with the difficulties; in fact it has contributed significantly to the problems.
	The Bill will ensure that the Government are prepared for the successful restructuring of the company or its administration. I would sincerely like to think that it will be the former. Administration is not my preference. It would be a major mistake. However, we need to make contingency plans for it, otherwise people will highlight it at each and every opportunity.
	Some colleagues I spoke to recently think that the Bill is a form of renationalisation, which in some people's minds is a good idea. However, even those on the extreme left wing of the Labour party would shy away from renationalising the nuclear industry, because the two do not tie together. I do not want to stray beyond the terms of the Bill. The energy debate has been touched on in a variety of forms, but it is for another day.
	The energy White Paper will be important in determining how the Government deal with the country's future needs. Some 11 days ago, I received a written response from the Minister to an oral question in which I asked about the energy White Paper. He gave the succinct answer that it would be published shortly. Today, he said that that might be published in February or March. Let me give my hon. Friend some advice. Some hon. Members greatly admire and love nuclear energy, so perhaps Valentine's day would be a good time to publish the White Paper. Others are not so keen, however. He has heard the arguments before, and perhaps he should beware the Ides of March. Whatever he decides, many of us look forward to the White Paper being published soon.
	The priorities of nuclear safety and security of supply must be met. The Bill will enable those to be determined in Committee and beyond. Security of supply has always been a feature of the energy debate. There is a wide variety of views on how it can best be achieved. The hon. Member for Ceredigion (Mr. Thomas) said that the 22 per cent. overcapacity could be dealt with by the closure of nuclear power stations, but that would create in the sector a fine balance that I would not be prepared to risk. He said that nuclear contributes to some 20 to 25 per cent. of power generation in the UK. I would not argue with that. My hon. Friend the Member for East Lothian (Anne Picking) rightly said that it is double in Scotland, at about 50 per cent.

Mark Tami: The margin of 20 to 25 per cent. has to exist. Another consideration is the position of the stations on the grid. Just switching them off would create many problems with balancing the electricity supply around the country.

Russell Brown: My hon. Friend is right. The strategic placing of sites is important for access to lines and interconnectors. It is strange that he should raise that matter, because I was about to mention a constituency case that relates to the position on the grid. Losing eight British energy sites would have an impact. Like some in the industry, I believe that it is a nightmare scenario. To return to the point made by my hon. Friend, there is a Magnox reactor run by BNFL in Chapelcross in my constituency. I was interested to learn that not many months ago, my predecessor, a long-serving Member of Parliament who supported that site for many years, had suggested to a colleague of mine that a replacement reactor on the site may not be a good idea because it was not close enough to the marketplace. My hon. Friend therefore made an interesting and important point.
	Many Members have driven home the point about people returning home in the evening and wanting power so that they can sit in a warm home and switch on the television. That is something that we all expect, and families without those luxuries desperately want them. There is therefore an even greater demand for power generation in this country. On security of supply, this time last year we had a detailed discussion with Ofgem about the Magnox station in my constituency, which centred on access to the interconnector. The power station exports everything to the interconnector and south of the border, so the regulator asked Scottish Power whether it could guarantee security of supply if it were not in operation. Eventually, after much browbeating, Scottish Power said that it could not. The site has four reactors generating 196 MW, so security of supply is clearly important.
	The potential for power reductions and what are known as "brown-outs" had been identified by others, which is why that information was fed to the regulator. However, it is not just household supply and domestic use that would be affected, but industry as well. We must consider how the industrial sector would be damaged if, as colleagues in the House have suggested, there was an early run-down and we did not support British Energy in the Bill. If restructuring of the company proves successful, the Government must ensure that they deliver their part of the deal, as financial assistance will be needed for nuclear liabilities. If restructuring goes wrong and British Energy goes into administration, the Government must be sure that they can acquire the power station business by acquiring the company or its assets directly, assuming that no third party wants to do so.

Michael Weir: Will the hon. Gentleman clarify that point? The Bill obviously gives the Government the ability to acquire British Energy in those circumstances, but what would happen if it did not complete its passage through Parliament and British Energy was unable to continue? Would the company automatically revert to the Government in any event?

Russell Brown: I am pleased that a member of the Scottish National party has turned up, but I expected the SNP to be here earlier. The hon. Gentleman assumes that the Bill will not go through.

Michael Weir: That is another question.

Russell Brown: The hon. Gentleman made that assumption. I am not about to assume that the Bill will not go through, because it clearly will.
	I asked the Opposition spokesman about a third party, but I am not convinced that a creature of that ilk exists. So we have a difficulty, which the Government and the Department of Trade and Industry have identified.
	We are duty bound—my hon. Friend the Member for East Lothian raised this point, too—to consider those who work in the sector. We must not write off people; we are talking about highly skilled work forces. The hon. Member for Twickenham (Dr. Cable) mentioned the figure of £5 billion and gave a breakdown of possible costs—£2 million 150 years from now, £2 million in 50 years' time and perhaps £1 billion now.
	A moral duty lies behind all that. This is not a game of figures and what we must do in 50 or 150 years from now. I know that only too well because we are already preparing for the closure of the Magnox site in my constituency that will take us into the next 15 or 20 years. BNFL has identified the liabilities and how the matter must be dealt with in the communities affected. My hon. Friend the Minister said in his opening remarks that we cannot simply switch off reactors and make moves toward de-fuelling—there is a cost attached to that. The economics show clearly that it makes sense to run the businesses and to utilise precious assets.
	Clauses 3 and 4 of this narrow, enabling Bill amend schedule 12 of the Electricity Act 1989. The proposed removal of the financial ceiling has allowed restructuring to go ahead. If the current ceiling is strictly interpreted, it could block the Government's delivery of their part of the deal, because we must guarantee British Energy's liabilities. The ceiling also makes no provision for inflation and does not reflect the industry's standard practice of discounting large sums in the distant future.
	The changing of the tax status of grants under schedule 12 is important: it will ensure that the Government can deliver their part of the restructuring plan without incurring a massive tax liability. That is why the Minister referred to giving with one hand but not taking away with the other.
	As my hon. Friend the Member for Ochil (Mr. O'Neill) said, this is a small Bill. It is pragmatic, but it will go a long way to assisting in the future.

David Hamilton: It was not my intention to speak in this debate, but there have been several speeches on which I should like to reflect. My hon. Friend the Member for Dumfries (Mr. Brown) talked about people on the left queueing up to participate in this debate. Obviously, I am not on the left, although I remember demonstrating against the opening of Torness power station in the constituency next to mine. I must always remember that Tony Benn signed the paper allowing nuclear power to start.
	One important issue is the security of Britain's long-term interests. Two or three colleagues have commented on the work force and it is important that I start with that point. We should remember that the work force will be very concerned at the moment. As someone who came from the coalmining industry, I understand that concern. We have all been listening to this debate intently. The work force will be looking to their future security.
	I am concerned that the ex-chairman of the company has walked away with a golden handshake and with a pension that many pensioners would be extremely pleased to enjoy. That matter needs to be investigated. We need to look at some of today's chairmen and the deals that they get when they go.
	It has been said that some 22 per cent. of fuel is generated by nuclear power. In Scotland, the figure is 50 per cent. I understand that the White Paper will be published in February or March and I look forward to the debate on it because the diversity of Britain's requirements is key. Whether we like it or not, we all have to play the game, but I am not a supporter of nuclear power. I have opposed it and nuclear weapons all my life. However, that is not the issue. We have many nuclear reactors throughout the country, and there is no question of closing them down. They should be allowed to come to the end of their natural life. In the long term, as the hon. Member for Twickenham (Dr. Cable) said, we should look at reinvesting in other renewables and in clean coal. What concerns me is that the money that has to be spent to bail out nuclear power could have been used in other ways, and can be in future.
	My hon. Friend the Member for South Thanet (Dr. Ladyman) said that the accident rate in the nuclear power industry was very small—one per year, I think he said—but all it would take is one major disaster at a nuclear power station to make that figure seem infinitesimal. Let me give an example. When I served on a council, we looked at the question of energy requirements and what would happen if a disaster occurred in the neighbouring county. Edinburgh would be taken out, Midlothian would be taken out, East Lothian would be taken out and Fife would be taken out. There would not be a firth of Forth; there would be a sea. That is what you have to think about as you listen to the debate.

Stephen Ladyman: The 11,300 people killed in the conventional power industry whom I mentioned earlier did not include the 8 million people whom the United Nations believes will die as a result of burning carbon over the next 10 years.

David Hamilton: That is why we need green coal—[Laughter.]—and long-term investment in other options. Conservative Members talk about privatisation of the industry, and then cry over spilled milk because the shareholdings have gone pear-shaped, and reject the criticisms that we make. Investment in health and safety is for the long term. You talk in terms of historical significance. I am too young to remember, but you may remember the smog in London and the 4,000 people who died. We moved away from that by introducing clean air Acts. Europe is moving towards that, which I welcome. With new technology, we can consider renewables and other options. Wind and wave power may sound ludicrous, but such energy sources must be developed.
	When we speak about security, let us think about what is happening in Iraq. Is it not all about oil? That is security, and in Britain we have to act.

Mr. Deputy Speaker: Order. The hon. Gentleman is starting to stray slightly outside the Bill. Also, may I remind him not to use the word "you" when referring to hon. Members in the Chamber? He must use the correct parliamentary language.

Nigel Griffiths: Youse!

David Hamilton: I said youse. That is a Scottish word, which is collective, but I take the point, Mr. Deputy Speaker, and thank you for your guidance. I did digress slightly on Iraq. I dare say that we will return to that in another debate.
	On the issues raised by the Minister and the billions of pounds involved, I see no alternative to what is proposed in the Bill. I will support it, because it contains the possibility that British Energy may come back into public ownership, if necessary. We do not have the luxury of voting against the Bill, when everyone knows full well that no other option is available to us. There is no third party that would be interested in picking up a dead duck.
	When I came to the House a year and a half ago, I was reminded many times of my responsibility to my constituents and the people who put me here. That is partly what the Bill is about. Some of the matters that we have to deal with in Parliament are unpalatable. If the public purse must be used to secure the long-term interests of energy, that is what we must do, rather than arguing about it when there is no alternative.
	Some important points have been made in the debate. I agree with the unions at the TUC conference when they decided unanimously—unusual nowadays—that the industry should be taken back into public ownership. I look forward to that day.

Albert Owen: It is difficult to speak at the end of a debate without repeating the points that have been made, but I have been here for most of it, while the hon. Member for Blaby (Mr. Robathan), who will speak from the Conservative Front Bench, has not, or at least his hon. Friends have not. That is not the point, however: it is difficult to make new contributions, but I shall try to do so.
	As has been pointed out, the Bill is an enabling Bill. While it is a technical Bill that enables the Government to deal with financial problems relating to British Energy, it is difficult to limit our comments and observations to this unique situation and not to discuss the wider ramifications for the electricity industry and nuclear energy in particular. Indeed, some clauses have a general application. The financial problems of British Energy have attracted wide interest, as has the impact on any future energy policies. I realise that you will call me to order if I stray on to the White Paper on energy policy, Mr. Deputy Speaker, but I point out that it is very significant, for reasons that I shall explain later.
	As the only Welsh Member with a nuclear power station in their constituency, I bring to the debate a Welsh dimension that I believe is current and relevant, even if it is not universally accepted by Plaid Cymru Members. My hon. Friend the Member for West Bromwich, East (Mr. Watson) referred to Welsh Water—he called it south Wales water—but I must correct him, as Dwr Cymru, Welsh Water, covers the whole of Wales. The Welsh model has some relevance in discussing a future model that is a halfway house located between full renationalisation and the private sector—a point that he made most forcefully.
	When the British Government announced the first loan to British Energy in September, I was approached by interested parties in my constituency—BNFL, managers, unions representing the workers in the local power station at Wylfa, environmental groups and individuals. They were concerned about the impact that such a decision would have on the electricity industry. Some blamed the managers of British Energy, while others blamed the Government or botched privatisation by the previous Government. A number of concerns were also expressed about the future of nuclear power. I believe that what is needed and will be provided in the White Paper is a mature debate about the right energy mix for this country and for the future.

Simon Thomas: Does the hon. Gentleman see in that mature mix, as he describes it, the need for new nuclear energy plants in Wales? Does he accept that his right hon. Friend the Secretary of State for Wales has ruled that out?

Albert Owen: I shall not stray into that debate—I know that you would not allow me to do so, Mr. Deputy Speaker—for which there will be ample opportunity. However, I should like to correct the hon. Gentleman, as I said that we needed a mature debate to get the right mix. All hon. Members will agree that we need to have that mature debate without being sidetracked by individuals' comments.
	When the loan was further extended and my right hon. Friend the Secretary of State for Trade and Industry told the House about the plans to introduce the measures before us today, the focus of attention shifted from the blame culture, whereby people tried to decide whose fault it was, to exactly how—not whether—we were going to introduce legislation enabling the Government to provide a safety net. The blame game was over. After all, British Energy is a major generator in crisis. Like every crisis, this one requires crisis management. The Government could not sit idly by and do nothing. That is why I support the Bill and the measures that it is introducing for the reasons that my hon. Friend the Minister set out.
	The Bill may not be good, old-fashioned nationalisation—a measure that a number of my colleagues, as well the groups and individuals that have contacted me, have mentioned—but, while I do not advocate renationalisation of British Energy, it is not such an absurd proposition, especially with plans to set up an authority to deal with public sector nuclear liabilities. While it would be wrong to engage in political point scoring, let us not forget that the privatisation of British Energy was a privatisation too far, as was privatisation of the railways. We now have to revisit the Railtrack fiasco and the privatisation of British Energy.
	The Government are right to implement plans to provide the necessary mechanisms in the event of administration or solvent restructuring. We cannot simply shut down nuclear power stations. I appreciate that some hon. Members on both sides tackled that, but it is important to emphasise it. We should reject simply shutting down nuclear power stations because of the job factor. It would also cost more to shut them down than to keep them open.
	As my hon. Friend the Member for Alyn and Deeside (Mark Tami) said earlier, many British Energy power stations are located in areas of high unemployment. They have links with other manufacturing industries in the area that would be severed if the power stations were simply closed, resulting in job losses downstream. I should like my hon. Friend the Minister to deal with that and assure us that jobs and contracts will be safeguarded if the Bill is enacted. I appreciate that it is a difficult matter for the Minister to tackle, but people in the nuclear industry who are worried about the knock-on effects have raised it with me time and again.
	Let us consider the interdependency of major employers. British Nuclear Fuels Ltd. owns the station at Wylfa in my constituency. As I said earlier, it is the only operator in Wales and it has some 500 employees and 100 permanent contractors. More than 75 per cent. of the work force is local, and it is well trained. Jobs there are the highest quality jobs in my constituency. Wylfa contributes £20 million per annum to the local economy. That is a quarter of my area's gross domestic product. Nuclear power stations therefore have a significant impact on the GDP of the areas where they are situated.
	My hon. Friend the Member for Midlothian (David Hamilton) mentioned the union stance. He rightly said that there was unanimity at the TUC conference, and I accept that that is rare. However, individual unions and leaders have approached me about the subject. They look to the Government to get matters right and ensure job security in future. Some advocate Railtrack-style solutions and others go as far as good old-fashioned renationalisation. However, safeguarding the quality jobs should top the agenda. Again, I press my hon. Friend the Minister for that assurance in his winding-up speech.
	The reasons for the Government's intervention are security of supply and guarantee of safe operations. They are important matters and, again, I call for a mature debate to get the right mix of energy needs for the United Kingdom. I believe that we all support that.

Brian White: My hon. Friend makes a strong case for British Energy to continue processing. However, does he accept that British Energy could operate in different ways rather than simply continuing with the current contracts?

Albert Owen: Yes, but insecurity exists. Some contracts could be jeopardised and we must therefore get the Bill right now.
	The Californian experience shows that if we do not provide the right incentives for new investment—in any sort of energy—we could end up with a worst case scenario. Fulfilling the demands of low carbon needs requires planning—proper planning, not knee-jerk reactions. The Bill will provide stability, albeit in the short term. It provides opportunities to re-examine the matter in future and perhaps accept good old-fashioned renationalisation or the Welsh model that some people advocate. However, we need the prospect of sustainable energy. We also need to deal properly with British Energy so that we can approach the White Paper on a level playing field. The Bill may be narrow but it has wide ramifications for nuclear power, the electricity industry and the review to which I look forward in a few weeks.

Andrew Robathan: I must tell the hon. Member for Ynys Môn (Albert Owen) that if the Whip asks him to speak for 15 minutes, he should not simply speak for 10 minutes. I could see the Whip saying that.
	Madam Deputy Speaker—[Hon. Members: "Madam?"] I am sorry, Mr. Deputy Speaker—[Interruption.] Perhaps I shall sit down; that would put the Minister in a difficult position.
	We are debating a Bill that will cost the British taxpayer perhaps £3 billion. I am glad to see the Secretary of State here now, because it is important that she registers by her presence the significance of the Bill. We regret that she was not here at the beginning of the debate, but I am sure that she was very busy.

Nigel Griffiths: Where is the shadow Secretary of State?

Andrew Robathan: I am sure that he will walk through the door as I speak. He was here for the first couple of hours.
	The Bill is very short, comprising two-and-a-half pages and five brief clauses. That has made the debate difficult in that many hon. Members—looking around, I see several of them—wanted to contribute at greater length to the more general aspects of energy policy, but were prevented by Madam Deputy Speaker from doing so. That is a pity, because some of those contributions would have been interesting.
	The Bill faces opposition from inside and outside the House. It comes on the one hand from free marketeers and on the other from what one might call the green lobby. I find myself in a rather schizophrenic, or hybrid, position, because I am both a free marketeer and—I do not want any hon. Members to tell my Conservative colleagues—I have been a member of Friends of the Earth for longer than I have been a member of the Conservative party. Moreover, I have a photovoltaic roof, which is kindly supported by the Department of Trade and Industry—it has not generated much electricity yet, but we long for sunshine—and I am looking to have a wind generator installed on some land in my constituency. I should say, however, that I do not support Friends of the Earth's position on nuclear energy, and I am not anti-nuclear. I detach myself from its arguments in that respect.
	The key question is whether the Bill is the right way forward for British energy and for our energy policy. I want to consider some of the contributions to the debate. The Minister made one of the funniest speeches that I have heard in the Chamber about Liberal Democrat energy policy. It is one to cut out and keep, and I intend to do so. He seemed very unhappy when he was speaking—indeed, the hon. Member for Twickenham (Dr. Cable) thought that he looked sombre. I suggest that that is because, through the Bill, he is presiding over a failure of policy and over chaos, to which we shall return later.
	My hon. Friend the Member for Reigate (Mr. Blunt) made a powerful and well-researched speech in which he highlighted the said chaos and failure of policy. He spoke about the blank cheque that hon. Members are being asked to sign today— we shall not do so—and the unlimited liability that the Government may face. He made an extremely well-argued alternative case and demolished the Government's policy on nuclear energy. Whatever the way forward may be, the Bill certainly is not it.
	The hon. Member for Ochil (Mr. O'Neill), who chairs the Select Committee, brought to the debate his knowledge and long experience of the DTI and pointed out the shortcomings of management. Up to a point, he made a sensible analysis with which I would not disagree, but his conclusions were somewhat unusual. He criticised the high dividends that British Energy had paid to its shareholders, then said that we could not let down the investors who had bought shares at ludicrously low prices. That involves a dichotomy or clash of logic that he may like to consider. In my view, it is not the business of the British taxpayer to bail out those who have made bad investment decisions.

Martin O'Neill: Perhaps I can help the hon. Gentleman through his problem. There are a great number of very small shareholders in privatised utilities, some of whom worked in them and some of whom bought their shares. It is the one investment that they have made in their lives. They do not have the sophisticated background of wealth and privilege that Conservative Members have. In several instances, they were mesmerised by the easy money period of the 1980s and early 1990s. Sometimes foolishly, they devoted undue amounts of resources to a single bet on the stock exchange. Those people need some degree of protection and assistance.

Andrew Robathan: I have every sympathy with those people who will lose money through poor investments, but I quote the hon. Gentleman again. He referred to ludicrously low prices for the shares and, in particular, criticised the high dividends that they paid to those same investors. He will recall that the taxpayers who are bailing those investors out are also elderly and they, too, have to struggle by on pensions. There is no dichotomy in my argument.
	The hon. Member for Twickenham, who spoke for the Liberal Democrats, described the Government as a gambler manically stuck at the table and thinking that the luck will turn, but when I looked at the Minister he did not strike me as a Michael Owen look-alike and he did not look much like a refugee from Las Vegas either. The hon. Member for Hazel Grove (Mr. Stunell) returned to the manic gambling analogy, and there is a certain truth in it.
	Although it may have been faint, the hon. Member for Twickenham gave some praise to the arguments made by my hon. Friend the Member for Reigate, which is always a bit worrying. The hon. Gentleman also pointed out that safety is not threatened, contrary to what people have been saying, nor is security of supply. A real issue of competition is involved, and he said that administration is the logical way ahead, because there is no shareholder value in the shares.
	The hon. Member for South Thanet (Dr. Ladyman) accused my hon. Friend the Member for Reigate of being dishonest.

Eric Forth: Of what?

Andrew Robathan: Of being dishonest. Contrary to what the hon. Member for South Thanet said, the Bill is not a good start, and he will rue the day that he said it was. He also said that it would be judged by its impact on shareholder value. I disagree, and he will rue those words as well.

Stephen Ladyman: I think I said that the hon. Gentleman's policy, not Government policy, would be judged on shareholder value. He is a friend of the earth, but does he not realise that the change in carbon dioxide concentrations since the second world war is equivalent to that associated with our coming out of the last ice age? Therefore, if we want to address climate change, we must do something about carbon dioxide reductions. That means that the policy of closing down the nuclear power industry suggested from the Front Bench by the hon. Member for Reigate is not the way forward.

Andrew Robathan: The hon. Gentleman has completely misunderstood the policy that my hon. Friend put forward, because it is not about closing down power stations. It is about letting the market run its course. The power stations will continue to operate, as was pointed out very ably by the hon. Member for Twickenham, with whom I do not always align myself.
	My hon. Friend the Member for Orpington (Mr. Horam), the Chairman of the Environmental Audit Committee, rightly pointed out the calamitous impact of the new electricity trading arrangements on the energy market from the point of view of the producer. Whatever the rights and wrongs of NETA, the Minister knows that we shared an Adjournment debate some 18 months ago on the bad impact that it also had on combined heat and power. My hon. Friend spoke with authority.
	The right hon. Member for Rother Valley (Mr. Barron) gave us a history lesson on the past 19 years of nuclear energy. I was not aware of the Prime Minister's hand in nuclear energy, so that point was of interest. I hope that the colliery in his constituency, which he was not allowed to mention, benefits from his support. I wish that he had been able to mention it. He agreed with us that taxpayers should not just compensate shareholders.
	My hon. Friend the Member for Cities of London and Westminster (Mr. Field) made a sensible and knowledgeable speech pointing out that the Government are anti-competitive. The hon. Member for Sherwood (Paddy Tipping) wanted to talk about wind farms, and I was looking forward to that. He pointed out British Energy's failure of management, and there is broad agreement across the Chamber on the tremendous mistakes that have been made. Whether they could have been avoided is, as always, a matter for dispute. He also pointed out the immense cost involved and made a sensible long-term point about the desirability or otherwise of cheap energy.
	My hon. Friend the Member for South Cambridgeshire (Mr. Lansley), who is a member of the Trade and Industry Committee, spoke without a note and made logical arguments. He criticised British Energy's failures, made a spirited defence of the free market and of NETA's contribution, and opposed renationalisation. We might not agree on every word he said, but his speech was excellent.
	I missed most of the speech of the hon. Member for Milton Keynes, North-East (Brian White), as I went out for dinner. However, I know that he has a sustainable energy Bill coming up, which sounds helpful.

Ivor Caplin: Steak and kidney?

Andrew Robathan: No, it was not steak and kidney pudding actually.
	We agree with much of what was said by the hon. Member for Ceredigion (Mr. Thomas), although I was not here for his speech. He agreed with the arguments made by my hon. Friend the Member for Reigate about security of supply and how the Bill was distorting the market. I am sorry that the hon. Gentleman is unlikely to vote with us—

Simon Thomas: I am voting with you.

Andrew Robathan: I am delighted to hear that. I thought that he had supported renationalisation.
	The hon. Member for Barnsley, West and Penistone (Mr. Clapham) said that safety was better in the public sector. I think that there is no justification for that.

Michael Clapham: If the hon. Gentleman remembers privatisation of the railways and the history of Railtrack and if he reads the report that the nuclear installations inspectorate published about 18 months ago, he will realise that industries are safer in the public sector.

Andrew Robathan: I am sorry that I cannot agree. With his name, the hon. Gentleman should remember the Clapham rail disaster, which happened long before privatisation. He should remember King's Cross and the underground. He should perhaps remember that a crash happened only this weekend on the underground, which has not, I think, yet been privatised, unless the Government have done so without telling us.
	The hon. Member for Hazel Grove repeated the gambling analogy, saying that we needed objective external assessment of liability costs. We agree with that entirely. We also agree that the market must play an important part and that the regulatory framework should be set by the House.
	I am afraid that I came in to the Chamber as the hon. Member for East Lothian (Anne Picking) was making her speech. I know that she spoke on behalf of her constituents at Torness, but the idea that wind and wave power will immediately take the place of other forms of energy is misguided. I understand, however, why she spoke on behalf of her constituents.
	The hon. Member for West Bromwich, East (Mr. Watson) spoke of Tory dogma, something of which I know nothing. He suggested that the matter is a safety issue. The hon. Member for South Thanet had already pointed out that British Energy has an exceptionally good safety record, and that there is one death a year in the worldwide nuclear industry. We may dismiss the argument about the safety issue. The hon. Member for West Bromwich, East theatrically gave us some great analogies, telling us that storm clouds were gathering and that there had been breathtaking complacency, but he must learn to keep a straight face on these occasions.
	The hon. Member for Preston (Mr. Hendrick) also referred to botched privatisation, then spent his entire speech blaming management. He made the profound point that some forms of generation are more expensive than others. The hon. Member for Dumfries (Mr. Brown) is of course a cheerleader for renationalisation. The hon. Member for Midlothian (David Hamilton)—possibly a pressed man—said that he was anti-nuclear power and a member of the Campaign for Nuclear Disarmament. I was glad he spoke about his responsibilities to his constituents, however, because we all share those.
	Many good points and informative speeches have been made on both sides. The collapse of British Energy is due to several factors. Poor management—management mistakes for those who prefer that phrase—is one. The climate change levy—the carbon tax—has certainly contributed. The higher level of business rates at nuclear power stations is another factor. The nuclear legacy is, of course, another issue. NETA, whether or not it is good for consumers, has created low prices, which has reduced revenue.
	The company is failing—indeed, it has failed. We say that that is the working of the market and that the company should go into administration. The Bill is a renationalisation measure. The Trades Union Congress was unanimous, we have been told, in wanting British Energy to be renationalised. Is that the spectre of old Labour coming out from under the skies of new Labour? [Interruption.] I can hear hon. Members saying yes.
	We must ask whether the Bill is good for the nuclear energy industry, taxpayers or the country. It is certainly not good for taxpayers. Taxpayers will bail out the company, perhaps paying £3 billion or more. The Bill is a blank cheque. Why, for instance, should taxpayers pay a £336,000 pay-off and £150,000 pension for the chairman and chief executive? If, under his leadership, the company failed and went into administration, he would not get that. My hon. Friend the Member for Tunbridge Wells (Mr. Norman) is promoting a Bill on Friday that would prevent failed directors from getting such pay-offs if they were not justified.

David Drew: Will the hon. Gentleman give way?

Andrew Robathan: I will not because I am about to sit down.
	We say, "Let the company go into administration." The true value of the power stations and their generating ability will ensure their continued existence, with better management. This is purely a short-term palliative, at enormous cost to the taxpayer. What will happen if, as my hon. Friend the Member for Stone (Mr. Cash) said, the Bill is hybrid and is thrown out? What will happen if the EU countermands the state aid subsidy? What will happen if the Minister does not get his Bill, as he may not? We think that this is a bad Bill, at huge cost, and we oppose it.

Brian Wilson: With leave of the House, Mr. Speaker. Through most of that speech I wondered whether it was a winding-up speech or an amateur dramatics adjudication. I am pleased to hear that the hon. Member for South Cambridgeshire (Mr. Lansley) got the award for the best performance from his Front-Bench colleague.
	I am sorry that I did not amuse the hon. Member for Blaby (Mr. Robathan) earlier, but one would need to work pretty hard to make the Electricity (Miscellaneous Provisions) Bill into a comedy turn. If the charge is that I was sombre, my reply is that I would rather be sombre than sanguine. What we heard from all Opposition parties tonight seemed to be remarkably sanguine on a number of scores. The best description of the Bill and its limited objectives came from my hon. Friend the Member for West Bromwich, East (Mr. Watson), who said that it was a good and pragmatic Bill. That is all it is meant to be and it reacts to a particular set of circumstances.
	Opposition Members were remarkably sanguine about security of supply. There were some extraordinary comments, as if it would be all right on the night and that we could wish away the contribution of the power stations that we are discussing; we could take 22 away from 22 and still have security of supply. That is absolutely nonsense, and we heard that from members of all the Opposition parties who spoke, and particularly from—

Andrew Stunell: rose—

Brian Wilson: I was just going to mention the Liberal Democrats. On the basis of their casual approach to security of supply, I would not put them in charge of the street lighting, never mind the nation's energy policy. Simply to say that there is not a security of supply issue in terms of the problems of British Energy seems downright bizarre.

Andrew Stunell: Is the Minister's opinion shared by the regulator, Ofgem? I got the impression that it did not support the Minister.

Brian Wilson: This has been sprung on me—[Interruption.] If the hon. Gentleman wishes to nitpick with Ofgem, he is welcome to do so. Since Ofgem's prime responsibility is to maintain security of supply—that is also my prime responsibility—we are at one on this question. I have certainly heard nothing from Ofgem in that regard; of course it recognises the importance of the contribution from British Energy. That, largely, has motivated us throughout this affair.
	We heard speeches from Tories, Liberal Democrats and from Welsh nationalists. The Scottish nationalists thought it was an 8.30 kick-off. After all, only 50 per cent. of Scottish electricity comes from nuclear power. We could not possibly expect any of the six Scottish National party MPs to turn up for a debate of this significance. It is, after all, still the Burns season.
	Opposition spokesmen who did participate were remarkably sanguine about the interests of the work force. The Tory spokesman, the hon. Member for Reigate (Mr. Blunt), gave them a mention towards the end of his contribution, but only after he had devoted his entire speech to making the strange point that the company should go into administration. I do not know whether he, the Liberal Democrats, the Welsh national party Members or Members of any other party have taken the trouble to talk to the British Energy work force or to the trade unions who represent them, but I can assure them that the one thing that people representing the work force do not want is for the company to be put deliberately into administration.
	We have always been honest with the unions—as with everyone else—that administration remains a possibility. However, to pursue that course of action, as the Opposition parties recommend, is certainly against the interests of the work force, in their perception. It is noteworthy that the only contributors to the debate to raise the interests of the work force were Labour Members: my hon. Friends the Members for East Lothian (Anne Picking) and for Ynys Môn (Albert Owen) and others.

Crispin Blunt: The Minister acknowledged that I referred to the interests of the work force during my remarks, but he cannot maintain that the interests of everyone else must come second to the interests of the work force. Clearly, the work force are in a wretched position, but their interests are not paramount over those of the rest of the country or of the taxpayer.

Brian Wilson: Nobody made that suggestion. I am pointing out that the hon. Gentleman was inconsistent. He advocated administration in 95 per cent. of his speech—an odd position in any case—and then, only at the end, expressed concern about the work force, who do not see administration as their preferred option.
	Many of the Opposition speeches were remarkably sanguine about the environment. The whole performance of the Liberal Democrat spokesman, the hon. Member for Twickenham (Dr. Cable), was supposed to be about carbon saving, yet he wants to close down the nuclear industry without the remotest regard for the economic consequences. He is prepared to forgo the revenues from nuclear power stations for the rest of their natural life in order to pursue the objective of turning the key on them at the earliest possible moment.
	How does the hon. Gentleman reconcile that approach with his supposed commitment to the imperative of carbon reduction? When it comes to the point, he and the organisations which he prayed in aid are much more anti-nuclear than pro-low-carbon. They refuse to face up to that dichotomy, but the public can see through it. They cannot have it both ways; they cannot preach a low-carbon message while walking away from a source of electricity that gives the United Kingdom 22 per cent. of our non-carbon generation at present.
	Opposition spokesmen were remarkably sanguine about safety, which is the other reason that we believe that what we are doing is essential for the future of British Energy and the only way for a responsible Government to act. The principal Opposition spokesman, the hon. Member for Reigate, put forward his plan for administration, but there was no clue as to who, apart from the Government, would take the company out administration. Rather belatedly, the hon. Gentleman sprang up to say that he was against the Government taking the company out of administration.
	The hon. Gentleman blithely said that if someone turned up to take the company out of administration or if it continued in administration there should be no bureaucratic impediments to the transfer of licence. Does he understand for a moment what is involved in transferring the licence to operate a nuclear site? Has he spoken to the nuclear installations inspectorate or to the Health and Safety Executive? I am delighted to say that they have made plain to me that there would be no automatic transfer of licence. Anybody who wants to operate a nuclear site, whether an administrator, a company or the state in some form, has to demonstrate that they are capable of doing so. We cannot simply brush aside concerns about security of supply, the impact on the work force, the environmental effects and the safety implications of licence transfer.
	Opposition parties vaguely think that they should be against the Government's proposals, but they do not have a clue as to what they would put in their place. At the end of the debate, I am reinforced in my view that what we are doing is the only plausible, practical and pragmatic way to approach the problems of British Energy.

David Drew: Does my hon. Friend accept that there is another important factor—the international aspect of the nuclear industry—and that one of the problems with losing one of the major firms in this country is that it would have a dramatic impact on our ability to work internationally in dealing with all manner of nuclear issues?

Brian Wilson: Of course I agree with my hon. Friend, but that is not one of the specific purposes motivating us to take action. Some people casually denigrate the nuclear industry, but thank heavens we have that degree of expertise in the United Kingdom, and we can send it out to other parts of the world, particularly parts of the former Soviet Union, where it is valued and where, as a result of the skills that have been developed in the United Kingdom, we can make plants less vulnerable to incidents. We can contribute to the international effort to make those plants safer.
	Of course we wish that we did not have the problems that we are addressing tonight. I have personally known about the circumstances at British Energy for a long time and those at Scottish Nuclear even longer, but those problems are not of our making and the choice that we face is how to respond to them in the most responsible way possible. The actions that we have taken since September have passed those tests. The official Opposition have changed their attitude since then because they recognise that we took the only responsible course of action in the immediate aftermath of those events. We could not walk away from the industry.

Martin O'Neill: My hon. Friend has rightly identified the expertise—we disagree about the pronunciation of that word—of the British nuclear industry and its personnel, but does he agree that one way in which we could sustain the industry and make it an attractive occupation and a lifetime career would be to give some more positive indications that it will be sustained beyond the next five to 10 years, which is the furthest horizon that most of us can see at the moment, without any positive statements and other positive documents that might be produced in the near future?

Brian Wilson: In the current circumstances, no one expects any document to say, "Go out and build nuclear power stations", even if it were in the power of a document to say such a thing. That is not to give away anything at all. However, there is a recognition that the industry will be with us for some time to come and that the worst of all worlds would be to lose the skills base on which it will continue to depend, so the future lies in that territory.
	I want to return to the point that the Bill is relatively narrow; it is an enabling Bill. It will provide parliamentary authority for the Government to incur expenditure on British Energy, which is necessary in case the company goes into administration. It will amend the Electricity Act 1989 to remove the ceiling on the financial system in relation to nuclear energy, and it will ensure that the Government can acquire British Energy's operating companies if it goes into administration. Those are the narrow purposes of the Bill.

Stephen Ladyman: An issue that has not been touched upon at all in the debate is how we move forward to a hydrogen economy, so that we can really start to make an impact on carbon emissions. How would we achieve a hydrogen economy without a continuing and successful British Energy and a continuing and successful nuclear power industry?

Brian Wilson: I do not want to second-guess what you might say, Mr. Speaker, but I suspect that one of the reasons why that issue has not been touched on is that it is not the subject of the debate, but, as always, my hon. Friend makes a valuable and constructive point.
	I want to try to answer some of the specific points that have been made. The hon. Member for Reigate seemed to blame BNFL for British Energy's difficulties. We had a little bit of an exchange about that, and I utterly refute what he says. I stress that the agreement that BNFL and British Energy eventually reach will be similar to that which the companies discussed last year. It ultimately became clear last year that BNFL could have done nothing on its own that would have been sufficient to help British Energy, given the company's position at the time.
	As I said, I find the Tories' support for administration strange, but that is their business. For our part, we responded to the company's plan for solvent restructuring. We assessed its implications with our financial advisers, and decided that we would play our part and support it. Administration has always remained an option for the company if its plan did not succeed. Whatever route we go down, British Energy's historic costs will be borne by the Government, and we know that there is not exactly a queue of buyers waiting to acquire the company. As the Opposition story unfolded, I waited for the final chapter, in which, with one leap, they would be free by telling us who are the mysterious people who are going to take the company out of administration—I am still waiting to hear. That reaffirms the point that it would have been irresponsible of this Government to push or to seek to push the company into administration.
	We have already pointed out that stations generate more revenue than their operating costs, and I am surprised that anyone even questions that—it is a pretty straightforward calculation. Because of the high capital costs of nuclear power stations, the operating costs are relatively marginal, and the revenue generated by every station outweighs them. As I said at the outset, it would be economic madness to shut the stations down and lose the revenue. I extrapolated from that that because it is economic madness—although it has a certain populous ring to it—it defines the economic policy of the Liberal Democrats.
	I also want to take issue with the hon. Member for Reigate about the Bruce station in Canada. He was the first to point out the risks involved in the leaseholder of the Bruce station repossessing the plant in the event of administration. I stress, however, that the decision to dispose of Bruce Power was not imposed as a condition of Government support and was taken by British Energy in October to preserve value against the risk that I have just highlighted.
	While it seemed at one point that we would have rather long winding-up speeches, we are now having fairly short ones. I will undertake to write to other hon. Members who have raised substantive points tonight.

Kevin Barron: The major issue in this small Bill is that of lifting the ceiling or cap that is set in schedule 12 of the original 1989 Act from £2.5 billion to whatever figure is decided. Is my hon. Friend secure in the knowledge that, whatever money the industry receives, given that it is in the private sector, it will be used solely for the liabilities left by the industry and not for other things?

Brian Wilson: The sums to which my right hon. Friend refers are for historic liabilities. That point was well made by the hon. Member for South Cambridgeshire, who made a good contribution to the debate. A distinction is made between historic costs and future operating costs, which must be borne by the industry and the company.
	Earlier, someone said that waiting for the White Paper was like waiting for Godot. After this debate, we can rework that cliché, and say that it is like waiting for the shadow Secretary of State to come through the door. Sadly, he has still not arrived. This is an essential, pragmatic, good Bill to deal with a situation that is not of our making. I commend it to the House.
	Question put, That the Bill be now read the Second time:—
	The House proceeded to a Division.

Mr. Speaker: I ask the Serjeant at Arms to investigate the delay in the No Lobby.

The House having divided: Ayes 314, Noes 167.

Question accordingly agreed to.
	Bill read a Second time.

BUSINESS OF THE HOUSE

Motion made, and Question put forthwith, pursuant to Standing Order No. 15 (Exempted business),
	That at this day's sitting the Motion relating to Select Committees in the name of Mr Robin Cook may be proceeded with, though opposed, until any hour.—[Mr. Heppell.]
	Question put and agreed to.

ELECTRICITY (MISCELLANOUS PROVISIONS) BILL (PROGRAMME)

Motion made, and Question put forthwith, pursuant to Orders [28 June 2001 and 29 October 2002],
	That the following provisions shall apply to the Electricity (Miscellaneous Provisions) Bill:
	Committal
	1. The Bill shall be committed to a Committee of the whole House.
	Proceedings in Committee, on Report and on Third Reading
	2.—(1) Proceedings in Committee, any proceedings on consideration and proceedings on Third Reading shall be completed at one day's sitting.
	(2) Proceedings in Committee, and any proceedings on consideration, shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
	(3) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
	Other proceedings
	3. Any other proceedings on the Bill (including any proceedings on consideration of Lords amendments or any further messages from the Lords) may be programmed.—[Mr. Heppell.]
	The House divided: Ayes 311, Noes 167.

Question accordingly agreed to.

ELECTRICITY (MISCELLANEOUS PROVISIONS) BILL [MONEY]

Queen's recommendation having been signified—
	Motion made, and Question put forthwith, pursuant to Standing Order No. 52(1)(a) (Money resolutions and ways and means resolutions in connection with bills),
	That, for the purposes of any Act resulting from the Electricity (Miscellaneous Provisions) Bill, it is expedient to authorise—
	(1) the payment out of money provided by Parliament of any expenditure incurred with the approval of the Treasury by the Secretary of State with a view to or in connection with—
	(a) the provision by the Secretary of State of financial assistance to British Energy plc or any company which either is or immediately before the passing of the Act was a subsidiary of British Energy plc (within the meaning of the Companies Act 1985);
	(b) the acquisition by the Secretary of State or his nominee or by a Crown company of—
	(i) any securities of any of those companies;
	(ii) any part of the undertaking or assets of any of those companies;
	(c) the carrying on of any undertaking acquired as mentioned in paragraph (b)(ii) or any undertaking using assets so acquired; and
	(2) any increase in the sums payable out of money so provided under Schedule 12 to the Electricity Act 1989 which is attributable to the repeal by the Bill of paragraph 4 of that Schedule or to any other amendment of that Schedule.—[Mr. Heppell.]
	Question agreed to.

Select Committees

Ben Bradshaw: I beg to move,
	That—
	(1) Standing Order No. 152 (Select Committees related to Government departments) be amended as follows:
	In the Table
	Item 7, column 2, leave out from 'Office;' to 'and administration' in line 7 of that item;
	After item 8 insert—
	
		
			  
			 'Lord Chancellor's Department Lord Chancellor's Department (including the work of staff provided for the administrative work of courts and tribunals, but excluding consideration of individual cases and appointments) 11'; 
		
	
	and
	(2) the Order of 5th November 2001 relating to Liaison Committee (Membership) be amended as follows: Paragraph (2), after 'International Development' insert 'Lord Chancellor's Department'.
	With the leave of the House, I should like to introduce this simple motion, which seeks to establish a new departmental Select Committee to scrutinise the Lord Chancellor's Department. Paragraph (2) provides that the Chairman of the new Committee will be a member of the Liaison Committee. I commend the motion to the House.

Eric Forth: That is all very well, but I think that the motion deserves more attention from the House than that. Of course, a case can be made for an additional Select Committee—I am sure that hon. Members will agree that the work of our Select Committees is of great importance—but it should not be so straightforward. Setting up a new Select Committee is not merely an administrative whim, but something of importance to the House and the taxpayer—a point that I shall touch on in a moment.
	The case for setting up the Committee is relatively straightforward. One has only to glance at the list of ministerial responsibilities to appreciate the extent of those of the Lord Chancellor's Department. They cover matters as diverse as the constitution, criminal justice and the courts. When we talk about courts, we immediately involve our constituents. Although the Lord Chancellor, who presides over the Department, is a Member of the other place, he has responsibilities that bear directly on the constituents of all hon. Members.
	I was surprised that the Electoral Commission was listed as one of the responsibilities of the Lord Chancellor's Department. Why the Lord Chancellor, magnificent though he undoubtedly is, should preside over the Electoral Commission, which deals with elections and is, one would think, our responsibility, is a subject on which we might want to dwell, perhaps not now but on another occasion. Perhaps that could the first subject that the Select Committee considers.
	Perhaps even more surprisingly, the Department is responsible for party funding. The responsibilities of the Lord Chancellor and his Department cover a remarkably wide range of activities, many of which are of direct interest to hon. Members and our constituents.

Desmond Swayne: It is not so surprising that the Department is responsible for party funding. My right hon. Friend will recall that the Lord Chancellor has been intimately involved with that subject.

Eric Forth: I hope that my hon. Friend will expand on that in the debate, for which, unusually, we have unlimited time. There is therefore ample opportunity for hon. Members to examine such aspects of the Lord Chancellor's responsibilities in detail.
	There is adequate rationale for the House to try to become involved through a Select Committee in the Lord Chancellor's Department. However, the remit is even wider, because the motion contains a teasing reference. In describing matters that the Select Committee covers, it refers to
	"Lord Chancellor's Department (including the work of staff provided for the administrative work of courts and tribunals, but excluding consideration of individual cases and appointments)".
	I assume that that is origin of the intriguing piece in The Times today, which is headed, "Tribunal move to double Irvine's empire". It explains that the Lord Chancellor's Department, which is currently an astonishing 12,000 strong, will increase to some 25,000 by 2006–07. That provides a further rationale, if we needed it, for establishing the proposed Select Committee. The remit of the Lord Chancellor's Department will apparently be expanded to cover all tribunals in the country, with a staff of no fewer than 25,000 souls. It is difficult to imagine 25,000 people at the beck and call of the Lord Chancellor; that is a scary thought.

Julian Brazier: My right hon. Friend eloquently outlines the destruction of the local basis of much of our business. The decision, which the Select Committee will doubtless examine early, to centralise all the staff who are currently employed by local magistrates courts committees will take the vital filter for advice to our local magistrates service away from the committees and hand it over to a central bureaucracy.

Eric Forth: I am grateful to my hon. Friend for making point. It shows that, for all the Government's rhetoric and spin about decentralisation and local responsibility, the reality is different. My hon. Friend gives a classic example. Huge and growing central bureaucracies are being created and they are reaching out with their tentacles to every aspect of local life and our local communities. The worst aspect of all is that the Lord Chancellor will be at the head of one of those gigantic bureaucracies. That is another clear-cut case of why we in the House should have a Select Committee to examine the proceedings of the Lord Chancellor's Department.

Peter Bottomley: My right hon. Friend will have seen on page 38 of the list of ministerial responsibilities, the Law Officers' Department—that of the Attorney-General and the Solicitor-General. Will my right hon. Friend invite the Minister to say whether the responsibilities of that Department are to be scrutinised by this Select Committee, another Select Committee or no Select Committee at all?

Eric Forth: I am grateful to my hon. Friend. I hope that the Minister might seek to catch your eye, Madam Deputy Speaker, and, with the leave of the House, respond to the debate, as he was obviously reluctant—embarrassed, probably—to go into too much detail about why the proposal has been introduced. I hope that, through your good graces, he might answer the question that my hon. Friend has just put. There is a genuine question whether there is a Select Committee covering the Law Officers' Department, although I shall make a few comments on the desirability of increasing the number of Select Committees per se.
	In passing, I utter a word of warning to the House. In this case there is, as I have suggested, ample justification for the new Select Committee. However, we voted last year to pay Select Committee Chairmen—I support that, and I think I am right in saying that the matter is with the Senior Salaries Review Body, which will, I expect, report to the Leader of the House in the foreseeable future—so taxpayers might be forgiven a touch of cynicism if they were to think, although I hope that none would, that we are in the business of increasing the number of Select Committees in order to increase the number of chairmanships in order to pay ourselves or some of our lucky colleagues higher salaries. That, of course, would not and could not be the case, but it might just flit across the odd taxpayer's mind, hanging as they are on every word of the debate.

Desmond Swayne: Given the breadth of responsibilities that the Committee will encompass, has my right hon. Friend given some thought to the large number of travel opportunities that could arise?

Eric Forth: I was just about to come to that point. I am probably giving away a trade secret in saying this, so I shall lower my voice in the hope that it does not travel too far: recently, there has been a request for an increase in the Select Committee travel budget. One reason given for that is that we are increasing the number of such Committees. The logic, I suppose, is in some ways inexorable—more Committees, more need for travel. One begins to see a picture building up of a House of Commons voting itself more Select Committees with more Members wanting to travel more to more countries around the world for more fact finding.
	I would have thought that those colleagues who are familiar with e-matters know that people can surf to their heart's delight, chat in ghastly rooms and do all sorts of other e-things and that that virtually eliminates the need for Select Committee travel. But not at all. Even those colleagues who are cyber freaks, familiar with the e-world, seem still to feel the need to travel extensively to do their fact finding, but that is a matter for another day.

George Osborne: A visit to the Lord Chancellor's apartment so that its members may see how public money was spent on the wallpaper would be a relatively cheap travel opportunity for the Select Committee. Given that the Leader of the House is such a good friend of the Lord Chancellor, he could arrange it.

Madam Deputy Speaker: Order. The scope of the debate does not extend as far as the hon. Gentleman might wish.

Eric Forth: Fortunately, Madam Deputy Speaker, I was not going to talk about wallpaper, as that is perhaps a matter for another day. I hope, however, that the House pays at least some attention to the point I am making. We want to be careful about how far we go in the direction that we are now taking. It will be important to justify each new Select Committee strictly on its merits and to give no hint that we are creating it for any other reason.

Edward Leigh: There is one serious and worrying point to make. There is a question of possible interference by the new Committee in judicial appointments. It is axiomatic in our constitution that Parliament should not become involved in judicial appointments. Has that concern flitted across my right hon. Friend's mind?

Eric Forth: It would have, but for the fact that the motion says that the Committee's work will be
	"including the work of staff provided for the administrative work of courts and tribunals, but excluding consideration of individual cases and appointments".
	I hope that that covers my hon. Friend's point. I would share his concern if there were any hint that Members of the House, even under the aegis of a Select Committee, would seek to involve themselves in the sort matters to which he referred. I hope, and believe, at this stage, that the motion's wording gives sufficient security against that.
	As far as I know, we only ever increase the number of Select Committees. I do not think that we seek ever to reduce it. There may well be a good case for increases, as there is on this occasion, but is this a one-way process? Can we only ever increase the number of Select Committees? Might there not, with the passage of time, be occasions on which we would be justified in saying that the work of a Committee was otiose or redundant, or that one Committee could be readily combined with another? In that way, we could reduce the number of chairmanships and the amount of travel and give the taxpayer some relief.

David Wilshire: Along those lines, does my right hon. Friend agree that one answer might be to use the same solution that the Government have available to them when it comes to deciding how many Ministers they may have and pay? Would not putting a ceiling on the number of paid Chairmen of Select Committees meet my right hon. Friend's point?

Eric Forth: That is a possible approach. Putting an arbitrary statutory limit on the number of Select Committees and having to prioritise within that number might well be the way forward.
	I am worried that we have a tendency only ever to expand our role and the institutions, and therefore costs, of the House of Commons. It would be more responsible to look at ourselves much more critically. We are, after all, the custodians of the taxpayers' purse. We represent taxpayers and are supposed to be here to scrutinise not only the Government's expenditure but our own. In that spirit, although I believe that there is ample justification for the setting up of the Select Committee proposed tonight, I hope that such an action will not be seen as automatic, axiomatic or something that can be put through simply on the nod.
	I recommend the motion to the House and to my colleagues but add that we must be ever vigilant against further suggestions that we should increase the number of Select Committees. Someone, somewhere—perhaps the Liaison Committee—will have to take a good look at that.

Edward Leigh: I want to explore further the point that I raised earlier. Although the new Select Committee may not become involved in the appointment of a judge, we constantly receive complaints about judges, which we refer to the Lord Chancellor's Department. He often replies telling us that he cannot interfere in judges' work, and our constituents write back to us again. Might not Parliament try to become more involved in what judges do in their courts, and does that not worry my right hon. Friend?

Eric Forth: My hon. Friend is on to an important point. I was satisfied that the Select Committee could not interfere in the appointment of judges, but given that the Lord Chancellor is ultimately responsible for our judicial system, there is a distinct possibility that it will inevitably become involved in cases in which, for example, there have been complaints about judicial matters or other matters that should be strictly for the courts. I am not sure that I know the answer. Perhaps we should have foreseen that and sought to amend the motion. The best that I can offer my hon. Friend is that we, as a House of Commons, will have to keep a close watching brief on the Select Committee and how it conducts itself to guard against any temptation to do what he suggested might happen.

Desmond Swayne: I sense that my right hon. Friend wants to move on, but he has urged us to support the motion. In view of what he said earlier about the ratchet effect, can he reassure me in respect of the Select Committee on Public Administration—

Madam Deputy Speaker: Order. We are not debating the Public Administration Committee.

Desmond Swayne: On a point of order, Madam Deputy Speaker. Would it be in order to draw attention to the fact that some of the responsibilities taken on by the Lord Chancellor's departmental Committee, as proposed, are currently matters that come before the Public Administration Committee?

Madam Deputy Speaker: That is not a point of order for the Chair.

Eric Forth: If what my hon. Friend states were the case, I am sure that the Chairman of the Public Administration Committee either would have sought to amend the motion or would have been here to take part in the debate. Since neither event has happened, I must assume that he is content.

Andrew Turner: I return to the point made by my hon. Friend the Member for Gainsborough (Mr. Leigh), with which my right hon. Friend was inclined to agree. Would it not be more appropriate for a Committee of this House to scrutinise judicial appointments than to leave them wholly in the hands of the Lord Chancellor?

Eric Forth: My hon. Friend is getting into some interesting territory. That is the kind of matter that may well emerge in a different form from the debates about the reform of the House of Lords and the role that the Law Lords play. There is undoubtedly a case for having a separate supreme court. Following that, there may well be a case for considering the election of judges rather than their appointment, and so on. But, Madam Deputy Speaker, this is not the occasion for that debate. I detect from your demeanour that were we to pursue this matter at all—never mind much further—we would get into some trouble. I take a certain pride in the fact that I am rarely called to order; I do not say that it never happens, but it happens relatively rarely, even when I am tempted by my hon. Friend the Member for Isle of Wight (Mr. Turner).

Robert Syms: rose—

Eric Forth: I hope that my hon. Friend is not going to tempt me to stray, but I will give way to him. Then I really must sit down.

Robert Syms: As the Lord Chancellor's Department is responsible for the judicial system in England and Wales, will my right hon. Friend consider whether the membership of the Committee should consist only of English and Welsh Members rather than those from, say, north of the border?

Eric Forth: You know better than I, Madam Deputy Speaker, that there will be a separate motion to consider membership. It is not a matter for today and my hon. Friend might like to consider the sensible point that he has raised in the context of that further debate. I believe that there is an amendment on the Order Paper that will allow him to deal with that very matter, since it touches on what he suggests.

Andrew MacKinlay: I have listened to this claptrap, which is demeaning Parliament, particularly since so many Conservative Members are great travellers. On this point, the Lord Chancellor does not cover Scotland, but he certainly covers Northern Ireland, where he makes all the judicial appointments.

Eric Forth: The hon. Gentleman's charm school refresher course does not seem to have done him much good. In trying to be helpful to my hon. Friend the Member for Poole (Mr. Syms), I said that a future debate would touch on the matter that he raised and allow it to be aired in a more relevant way. If the hon. Gentleman is going to get so tetchy at this time of night, he should go home earlier.
	I hope that I have made the case for supporting the establishment of the new Select Committee, but I hope equally that, in future, we shall be careful not to rush too far, too readily or too frequently in such directions. 10.55 pm

Paul Tyler: I am sure that the House will be relieved to hear that I shall speak briefly.
	When I saw the motion on the Order Paper, I had a hunch that the right hon. Member for Bromley and Chislehurst (Mr. Forth) would want to speak. No doubt he has been wrestling with the temptation all day. The right hon. Gentleman has a Pavlovian reaction; the magic words "until any hour", especially at 10 o'clock, always encourage him to be in his place, although he may not be there earlier in the day when we are discussing matters that require longer and more careful scrutiny.
	The Parliamentary Secretary, Privy Council Office, must feel that, given the terms in which the right hon. Member for Bromley and Chislehurst has just expressed his support, it would have been preferable to have the right hon. Gentleman's opposition—it might have been shorter. However, I hope that the whole House will support the motion. I notice that the Conservative ranks have suddenly diminished, so perhaps an advantage of my speech is that I have cleared them out of the House.
	We are delighted that the Parliamentary Secretary, Lord Chancellor's Department, is in the Chamber this evening. The key issue is that there is a lacuna at present. The Lord Chancellor's Department has taken on important responsibilities. It is extremely important that when a Department of State has a wide range of responsibilities, there is a corresponding Committee of the House that can monitor its activities.
	As the right hon. Member for Bromley and Chislehurst pointed out, in addition to its judicial responsibilities and its responsibilities for the law offices, the Department has important responsibilities for the way in which our constitution operates and for its future. The Electoral Commission and party funding are just part of that remit. It is thus extremely important that the Department has the attention of Members of the House through the scrutiny that only a Select Committee can give. Hitherto, the Select Committee on Home Affairs had most of the responsibilities in this field and its Chairman, the hon. Member for Sunderland, South (Mr. Mullin), suggested that given the Committee's responsibilities to the Home Office, it was time to deal with the omission as regards the Lord Chancellor's Department.
	We strongly support the motion and recommend its acceptance. We hope that the Select Committee will be up and running shortly. Through no one's fault, we have had a long wait for it. Since the last general election and certainly since the last reshuffle, which gave the Lord Chancellor's Department new responsibilities, it has been suggested that there should be a Select Committee. We believe that the new Select Committee has an important duty to perform on behalf of the whole House.

Peter Bottomley: The agencies of the Lord Chancellor's Department, such as the Land Registry, the Public Record Office, the Court Service and the Public Guardianship Office deserve attention from a Select Committee—not in opposition to the Government but to raise some of the issues that Members of Parliament and their constituents face when dealing with the systemic success or failure of parts of the Department.
	We should recognise that some of the ministerial responsibilities of the Lord Chancellor and the Parliamentary Secretaries merit the attention of the Select Committee—in which I have an interest—in terms of either support or questioning. The Committee could get Ministers and their leading officials to justify their approach to matters that affect people the length and breadth of the land.
	One might make a series of party political points, but they would not be appropriate at present. It is important to realise that all Departments, including the Lord Chancellor's Department, and Government agencies have serious responsibilities.
	To refer to one of the remarks made by my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth), we have too many Departments and it is not sensible to load responsibility for matters such as information technology on to Under-Secretaries in each Department. It is not sensible to tie such responsibilities to a junior Minister, when we do not get a cross-cutting Government report on what is happening with IT across the board. Such a report need not be in great depth, but just enough depth so that people can understand. One could take up various issues if there were a way to use perhaps the Liaison Committee to talk to the Prime Minister about unpacking some of the public relations spin that the Government put out.
	This motion is overdue. Although the Select Committee may not be the most exciting in terms of the television cameras and the microphones, there will be possible benefits to the population. If the Lord Chancellor's Department and its agencies are helped to carry out their responsibilities, the public at large will benefit. There are degrees of justice and injustice in the Department's purview that deserve attention, which is why I hope the House will support the motion.

Mark Francois: I should like to make just a few points in contributing to the debate. First, the proposed Select Committee will have a particular responsibility, because it will attempt to shadow a Department, the principal Minister of which is based in the other place and therefore unable to answer questions on the Floor of the House. Apropos of that, it is worth recalling that in last week's debate on House of Lords reform, a very interesting suggestion was made: that it might be possible to change the arrangements of the House. The hon. Member for Thurrock (Andrew Mackinlay) is nodding. In fairness, he may have made that suggestion.

Andrew MacKinlay: It was one of my good ideas, which will not be implemented in my lifetime—

Madam Deputy Speaker: Order.

Mark Francois: If I recall correctly, to do the hon. Gentleman justice, he suggested that it might be possible to change our arrangements, by mutual agreement between both Houses, to allow Ministers in another place to come here occasionally to answer questions. I presume that that would be reciprocated in turn. That interesting suggestion bears further examination, and it is worth putting it on record again in the context of this evening's debate, perhaps to try to keep the suggestion alive, as it could be valuable.
	Secondly, I should like to reiterate some of the points made by my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) about the dangers of the so-called ratchet effect. We are not here this evening to debate the economic condition of the country, but having read the business pages of the national newspapers, it is fair to say that the economic conditions are now turning a little more difficult than they were a year or so ago—

Madam Deputy Speaker: Order. The hon. Gentleman is right: we are not here to discuss the economic conditions of the country. Perhaps he will return to the motion under discussion.

Mark Francois: Thank you, Madam Deputy Speaker. I am pleased that we both agree. However, the point is that at a time when people will be looking more closely at how we in Parliament spend their money, it is very important that we can justify to all our constituents that we spend it effectively. If they see more and more Select Committees taking more and more overseas trips—in effect, ultimately, at their expense—there is a risk that they will grow increasingly irritated.
	It is fair to say that the Select Committee might be tempted to travel the world to see other judicial systems in action—perhaps those in Europe, the United States and Asia to cite three examples off the top of my head—to compare them with our own. The Select Committee, if it is established, will therefore have to show restraint in that regard. May I say briefly in my own defence that the Select Committee on which I serve—the Environmental Audit Committee—has been particularly abstemious in that regard. We have had one overseas trip—

Madam Deputy Speaker: Order. Once again, I remind the hon. Gentleman that the motion relates to the proposed Select Committee's terms of reference.

Mark Francois: Thank you, Madam Deputy Speaker. In that case, I shall not mention that the Environmental Audit Committee spent two nights in Germany at very small public expense.
	Another issue is that the Chairman of the proposed Select Committee will, of course, be a member of the Liaison Committee. That will give its Chairman a right to ask the Prime Minister questions at the sittings that will be arranged from time to time. The practical issue is that I am given to understand that there is some friendly competition and jockeying of position among the various Committee Chairmen about who gets the chance—

Madam Deputy Speaker: Order. We are not discussing the membership of the Committee, but merely the establishment of it.

Mark Francois: I shall abide by your stricture, Madam Deputy Speaker. My sole point was that there would be more competition over who got to ask the question.
	On modernisation, since the introduction of the changes, there has been tremendous pressure on all of us—even more than previously—to be in two or even three places at once. I notice that that issue even cropped up in the national press over the weekend. Establishing yet another Select Committee, on which some Members will wish to serve, increases the pressure on Members across the House to be in even more places at once. That additional pressure results from the introduction of changes by the Leader of the House, and the establishment of this Committee will impose an additional burden.

John McWilliam: Is the hon. Gentleman arguing that we should not have another Select Committee to scrutinise public expenditure that has not heretofore been scrutinised?

Mark Francois: I am attempting to make the point that if we create an additional Select Committee, and we appoint Members to it, that will increase the pressure on those Members to be in different places at once during the week. All Members are experiencing that pressure as a result of the changes.

Madam Deputy Speaker: Order. Once again, we are not this evening discussing the membership of the Committee.

Mark Francois: I was simply doing my best to respond to the question that was asked of me, Madam Deputy Speaker. I am not responsible for the questions that are asked.

Peter Bottomley: If my hon. Friend looks at the list of ministerial responsibilities on page 41, he will see that one Under-Secretary—not one on the Front Bench now—has responsibility for freedom of information. If Members were criticised for not being in the House, would it be fair for that Under-Secretary to be on the Bench the whole time, while the number of MPs, journalists—

Madam Deputy Speaker: Order. That intervention is not relevant to this debate, either.

Mark Francois: I know that this question is close to the heart of the Leader of the House because of the close and fraternal relationship that he enjoys with the Lord Chancellor. I am therefore sure that he will read our deliberations with tremendous interest in Hansard tomorrow morning, and that he will be forever grateful for everything that we have had to say about his noble Friend.

Edward Leigh: I want to refer specifically to the motion. It refers to
	"consideration of individual cases and appointments".
	Thus it specifies "individual cases", but does not qualify "appointments". The value of these debates comes from Parliament doing its duty: we are trying to tease out from the Minister exactly what the Select Committee will do. I am sure that the Minister will be able to assure me that although the word "appointments" is not qualified, the Committee will not be allowed to consider individual appointments. I think that he is nodding, but he can take up the matter when he makes his speech. Does that mean that the Committee can consider the question of judicial appointments in general? That would be a way in for the Committee, as it could argue that it is considering a certain type of person. There has been a lot of criticism from certain parts of the House about judicial appointments in relation to background and being out of touch. It is therefore important that the House knows exactly what is the Committee's remit in relation to appointments, as the Minister's words will be scrutinised with great care.
	Secondly, as my right hon. Friend the shadow Leader of the House has said, the motion also refers to
	"the administrative work of courts and tribunals".
	Will the Minister also lay down the ground rules clearly in relation to that when he replies? On reading that, one will think that it is absolutely clear: the Committee will not become involved in appointments; it will not become involved in what the judges are deciding in their courts; it will be involved only in administrative work.
	However, I put to the Minister the point that I put to my right hon. Friend: our constituents write to us and complain about judges; we reply "I'm sorry. Parliament cannot interfere in the discretion of judges." I am in a long-running correspondence in which my constituent says "I'm complaining not about the judge's decision, but about his demeanour. He was out of touch. He wasn't listening to the arguments."
	Therefore, I should like a clear steer from the Minister that the Committee really will be concerned with the pure administrative work, and that nothing in the wording of the motion will give a lead for it to start interfering in the way in which judges are running their own courts.

Ben Bradshaw: With the leave of the House, Madam Deputy Speaker.
	I am tempted to agree with the hon. Member for North Cornwall (Mr. Tyler) that, although no one has spoken against the motion, one reason why we are here has more to do with the withdrawal symptoms of the shadow Leader of the House from his previous late-night sittings—

Paul Tyler: Something of the night.

Ben Bradshaw: Absolutely.
	It might be helpful if I reminded the House why this matter is before us. It is because of a unanimous recommendation of the Home Affairs Committee. Much of what the right hon. Gentleman and his hon. Friends have said this evening has been about the powers—some of them real and some of them imagined, some of them possibly in the future—of the Lord Chancellor's Department. But are they suggesting that those powers should not receive proper parliamentary scrutiny? No, they are not, because the right hon. Gentleman himself said that he supported the setting up of the Committee. Indeed, the hon. Member for Worthing, West (Peter Bottomley) said, I think rightly, that it was overdue. Therefore, I think that we can all agree on the importance of setting up the Committee. We are not here to discuss setting up any other Select Committees or the Committee's membership. It is a simple motion.
	I should like to address the point raised at the end of the debate by the hon. Member for Gainsborough (Mr. Leigh). I am assured by the Parliamentary Secretary, Lord Chancellor's Department, my hon. Friend the Member for Doncaster, Central (Ms Winterton), who is with me on the Front Bench, that he is right. The Committee will not be scrutinising the appointment of individual judges, but, in as far as the Lord Chancellor's Department oversees the work of the Appointments Commission, it may have a role in scrutinising overall the work of the Commission in terms of how the Lord Chancellor's Department already does so.
	There is nothing more I need add to delay the House further.

Peter Bottomley: On a point of order, Madam Deputy Speaker.
	I hope that the microphones carried the question of my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) to the Minister about whether the Select Committee that we are debating, or any other, oversees the work of the Law Officers.

Madam Deputy Speaker: That is not a point of order.

Ben Bradshaw: I am happy to respond, Madam Deputy Speaker. I am told that that competence remains with the Home Affairs Committee.
	Question put and agreed to.

EUROPEAN COMMUNITY DOCUMENTS

Motion made, and Question put forthwith, pursuant to Standing Order No. 119(9) (European Standing Committees),

Recognition and Enforcement of Judgements in Matrimonial Matters and in Matters of Parental Responsibility

That this House takes note of European Union Documents No. 8395/02, draft Council Regulation concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and in matters of parental responsibility repealing Regulation (EC) No. 1347/2000 and amending Regulation (EC) No. 44/2001 in matters relating to maintenance, and the unnumbered explanatory memoranda of 14 November 2002 and 9 January 2003 from the Lord Chancellor's Department and Scottish Executive Justice Department on the Presidency proposals for amendment of the draft Regulation; supports the underlying aim of extending the principle of mutual recognition to decisions on parental responsibility by establishing a clear and coherent set of rules for attributing jurisdiction, and putting in place arrangements for co-operation between the courts and central authorities of the Member States; considers that the proposed amendments would achieve the objectives of the United Kingdom in relation to child abduction; and welcomes the reinforcement of support for the 1980 Hague Convention on the Civil Aspects of International Child Abduction whilst providing Community measures to supplement its provisions to enable enhanced European co-operation against the wrongful removal and retention of children.—[Mr. Heppell.]
	Question agreed to.

DELEGATED LEGISLATION

Madam Deputy Speaker: I propose to put together the Questions on the two motions.
	Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

Constitutional Law

That the draft Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) Order 2003, which was laid before this House on 12th December, be approved.

Northern Ireland

That the draft Commissioner for Children and Young People (Northern Ireland) Order 2003, which was laid before this House on 18th December, be approved.—[Mr. Heppell.]
	Question agreed to.

COMMITTEES

Madam Deputy Speaker: With permission, I shall put together motions 8 and 9.
	Ordered,

Science and Technology

That Mr Mark Hoban be discharged from the Science and Technology Committee and Mr Robert Key be added to the Committee.

Treasury

That Kali Mountford be discharged from the Treasury Committee and Angela Eagle be added to the Committee.— [Mr. John McWilliam, on behalf of the Committee of Selection.]

PETITION
	 — 
	Health Choice

Lady Hermon: I have the great pleasure of presenting what I believe to the first petition from Northern Ireland on herbal medicines. The 136 signatures have been collected in my constituency by Mr. James O'Brien, who has been the proprietor for 25 years of the health store At Harvest in Bangor, County Down, of which I am a customer.
	The petition reads:
	"The petition of consumers for health choice and its supporters,
	Declares that consumers in the United Kingdom have for many years maintained good health by choosing to take safe vitamin and mineral supplements and herbal remedies; and fears that the European food supplements directive and the proposed European directive on traditional herbal medicinal products would severely restrict the number and range of such products on general retail sale in the future.
	The petitioners therefore request that the House of Commons requires that the Secretary of State for Health does all in his power to protect the rights of UK consumers by ensuring that such European legislation does not unnecessarily and unacceptably restrict the availability of natural health products."
	To lie upon the Table.

DISABLED FACILITIES GRANTS

Motion made, and Question proposed, That this House do now adjourn.—[Charlotte Atkins.]

Helen Jackson: The reason for my seeking this Adjournment debate is to highlight a problem that is well known to every Member of the House, and to suggest some solutions, which entail a co-ordinated approach being taken by Government, and spending that triggers longer-term savings. What I am after is fast-track access to a Government-backed incentive scheme for the installation of level-access showers as a major contribution to the goal of independent living for everyone.
	Poor housing is sometimes seen as a Cinderella issue in the House, yet we all know that comfortable homes make for better health, safer communities, more independence and increased dignity of life. I am focusing on a particular aspect of the home: the need, and I suggest that it should really be seen as a right, for everyone to be able to bathe daily in warm water in their own home. Access to hot water is recognised as an emergency repair for landlords, but the hot water is no use if the individual cannot get in and out of their bath.
	This is a particularly Anglo-Saxon problem. In warmer countries on the continent, and indeed in many parts of the developing world, showers—level-access showers—with the drain in the floor are the norm. In England, however, lounging in the bath became fashionable, so much so that the bath became a far more accepted piece of bathroom furniture than a shower. The problem was made worse when showers became fashionable because they were always installed over a bath, so that the stiff joints and infirmity that prevent access to the bath also prevent access to the shower. Surely in these days of central heating we could follow the example of warmer countries and redesign our bathrooms.
	How many of us in the House have letters from constituents pleading for help? I quote from one:
	"My husband is 80 and I am 78. There is no way I can help him in and out of the bath as I am only 4ft 10."
	How many constituents are there whom we never hear from but who are struggling with a daily wash at the basin in a chilly bathroom because they are unable to climb into the bath, but have never applied for an adaptation? The number of friends to whom I have spoken about this debate who have had a friend or relative in that situation has certainly surprised me. How often have we had profuse letters of thanks from disabled people whose life has been transformed by the installation of a level-access shower?
	More seriously, how often have we heard from constituents whose application has been turned down? A housing office turned down a constituent of mine
	"because she said he was able to have a strip wash and was not incontinent."
	It is commonplace for such cases to be classed as non-urgent, and even if people apply for help they can wait for years before they are considered for a bathroom conversion. The delays can mount up.
	The first problem is discovering how to make the application. Some 30 per cent. of those questioned in the Joseph Rowntree survey in August 2001 had a problem gaining access to a disability grant. The second problem is waiting for an assessment. In many authorities, that has to be carried out by an occupational therapist, but they are in short supply, which can lead to a wait of eight months or more.The time that it takes for the occupational therapist to submit a report and for the authority to consider the recommendation can vary widely. If the recommendation is yes, there is another wait for the builder to assess and carry out the work; but if the answer is no, because the individual can manage a strip wash, the application may become non-urgent and take an additional 18 months at least. I have known people to wait three years: that is simply not acceptable in the new century.
	Some 1,370 individuals are waiting for bathroom adaptations in Sheffield alone; some 658 of them are classed as non-urgent. The council recently allocated a welcome additional £500,000 to reduce the numbers, but I am not sure how that will affect the non-urgent cases. The 2001 Joseph Rowntree survey found that the most common reason for applications for major adaptations is the inability to bathe. Age Concern found that nearly a quarter of applicants mention bathing as the main reason for needing alterations to their homes.
	I believe that I am speaking to a Minister who is sympathetic to my argument. The Government recognise that people want to live in their own homes and communities as they get older and are a little more unsteady. They also know that moving to residential establishments can be distressing, sad and hard for relatives and carers. The Minister's colleagues in the health team also have a huge interest in speeding up the number of bathroom adaptations to relieve the problem of bed blocking. The Community Care (Delayed Discharges Etc) Bill, which recently went through the House, has put pressure on local authorities to respond, but speed is crucial when a hospital bed is needed by someone else. It is often the bathing facility at home that is the biggest block to a patient's discharge from hospital.
	In preparing for the debate, in addition to speaking to my constituents I consulted the Union of Construction, Allied Trades and Technicians, the Federation of Master Builders, the Institute of Plumbing, the Bathroom Manufacturers Association, Age Concern, both locally and nationally, the National Housing Federation, the Chartered Institute of Housing, Shelter, public health officers, the Chartered Institute of Environmental Health, disability organisations, Barnado's, which had specific concerns about disabled children, Sheffield local authority and its social services department, and the local primary care health trusts. They all gave me wholehearted support.
	I want to attack the issue from two directions. Clearly there are ways in which we can make the grant systems more accessible and better funded, but if bathrooms were normally designed to include a level-access shower, rather than one over the bath, the problem would be hugely eased. Just as in the 1980s, when the provision by the Government of insulation grants for owner occupiers or private and public landlords raised the standards for all housing and made a significant input into energy savings across the country, a more universal approach to level-access showers in our bathrooms could make all our houses last as our homes for longer.
	I pay tribute to the movement for lifetime homes, which is to be wholly supported. In one of its press releases it quotes someone as saying:
	"The ability to gain access to the whole house is wonderful. I'm no longer a prisoner"
	in my own home. The pepper-pot approach to funding one-off bathroom adaptations is not as good value for money as further reform of building regulations and house improvement regulations that assume that bathroom design will include a sealed corner with a plug in the floor and a shower in the wall. It is a little like the proponents of diesel motor cars who argue that if diesel fuel had been discovered first no one would ever have used petrol for the internal combustion engine. We should note that the high-level and rather posh bathroom design journals include pictures of children, elderly people, adults and families using level-access showers, making bathing easy and efficient for the whole family.
	In consultation with interested bodies, we have discussed the way in which a level-access shower grant scheme could work. There could, for example, be a modest flat-rate grant for universal access subject to building regulation checks, which would offer an incentive to owner-occupiers, tenants and landlords alike. For many, a simple incentive contribution like the old insulation grant would be all that it would take for large-scale work to be done. The Government could also consider issuing further guidance on housing improvement schemes, whether in the private landlord or housing association sector, so that level-access showers were considered an element of the work normally undertaken, and consider providing a financial incentive to achieve that.
	That incentive would be additional to the existing disabled facilities grant scheme for people whose disabilities or hospital discharge mean that their needs require urgent attention, or installing a shower could be combined with other extra building work throughout their home. Another aspect that the Government may consider is the need in every case for an occupational therapy assessment, as that often leads to delays. Perhaps we should recognise that a simple request for help is often all that we should require. There should be a clear directive from the Government to local authorities about what should be classed as non-urgent and a further reminder should be given about the mandatory nature of disability facility grants. In some areas, the requisite six-month period applies in the private sector but not where housing stock is publicly owned. I believe that that is the case in many of the larger metropolitan authorities. As the prospect of years of waiting drives people who have a little cash to spare to invest in the work anyway, the Government have a duty to offer an incentive. My constituent Mr Chisnall struggled for many months following his wife's stroke to get help so that work could be done. Eventually he had a shower installed at his own expense, and in his words it has "transformed their lives".
	Finally, installing the showers would offer a stream of useful work for local accredited builders and plumbers. The Federation of Master Builders believes that the industry could cope and has made many useful suggestions about quality control, simplicity and speed. As we await the publication of the draft housing Bill and the draft disability Bill, the Government have a chance to consider how such a proposal may be developed. I would be delighted to meet the Minister again with some of the bodies that I have spoken to after this debate to consider the issues further. We can be quite certain about one thing—my proposal would receive active and enthusiastic support from the public throughout the country, and bodies working with the elderly, the disabled and disabled children. Like me, they believe that it is simply unacceptable in the 21st century to fail to ensure that everyone has the opportunity of a warm all-over wash or shower to maintain dignity and independence in their home.

Tony McNulty: I congratulate my hon. Friend the Member for Sheffield, Hillsborough (Helen Jackson) on securing a debate on such an important subject. I thank her for describing me as a sympathetic Minister. I hope that she still takes that view by the time that I have finished speaking. I am grateful to her not least for bringing to my attention the problems encountered by some of her disabled constituents in Sheffield concerning delays to the installation of level-access showers. I agree with her absolutely that those delays are wholly unacceptable. In this day and age, such facilities are an absolute must.
	To pick up one of my hon. Friend's points, I should like to make it clear that the Government's overall position remains that access to a bath or shower is a mandatory right for disabled people who are eligible for a disabled facilities grant. We consider the grant programme to be very important in assisting disabled people to remain in their homes and live independently for as long as possible.
	That is why, when we recently reviewed local authority powers to provide assistance for housing renovations and adaptations, we decided to keep DFG as a mandatory right for eligible applicants. That is also why we have kept the money ring-fenced; it can be used only to help the disabled. My hon. Friend will know that we have unhooked much of what we give to local government, but we felt that it was important to keep DFG ring-fenced. For all other types of renovation assistance, we have given—I think quite rightly—local authorities much greater local discretion on how their funds are allocated. We cannot send a message that such a grant should be a mandatory right for those disabled people eligible and at the same time somehow retain flexibility.
	In addition to preserving the mandatory DFG, we have since coming to power significantly increased the resources available to the programme. The Government meet 60 per cent. of the grant paid by local authorities, which must find the remainder from elsewhere in their budgets. In 1997–98, central Government resources available for DFG totalled £56 million for England, but the budget for 2002–03 is £88 million.
	Securing additional resources for the programme is also one of the priorities for the Office of the Deputy Prime Minister, and we are considering it as part of our work on preparing the communities plan. We will announce our conclusions in the next few weeks as well as announcing the DFG allocations to local authorities for 2003–04.
	The problems in delivering a first-class adaptations service go wider than the DFG programme. Both housing and social services authorities have responsibilities to meeting the needs of disabled people in their area, either for advice or for the provision of equipment or adaptations. There is therefore a need for close co-operation between the two departments, and Government guidance has stressed the need for jointly agreed policies and procedures on how the various services should be delivered. In general, as my hon. Friend has said, it has become established practice for social services to provide equipment and minor adaptations, and for the DFG programme to deliver major adaptations such as stair-lifts and level-access showers, which may require structural alterations.
	All owner-occupiers and all tenants, including those of the local authority, are eligible to apply for DFG, but the Government do not subsidise the local authority to carry out work on its own stock, so it is important that the authority also budgets carefully and makes resources available to provide an adaptations service to its tenants that is at least as good as that to owner-occupiers.
	The local housing authority has additional discretionary powers, which it can use to top up the mandatory DFG system. Indeed, we have just legislated to simplify those powers under the Regulatory Reform (Housing Assistance) Order 2002. The order gives local authorities much greater discretion on how they provide assistance for housing repairs, improvements and adaptations. Those powers could be used to provide specific forms of adaptations and to speed up delivery—providing, of course, that the local authority is able to make the necessary resources available.
	Owing to the complexities involved, we have been working closely with the Department of Health to produce new best practice guidance to authorities on how an effective adaptations service can be delivered. I am pleased to tell my hon. Friend and the House that we will in the next few weeks be publishing new draft guidance for consultation.
	Let me turn to the specific issue of the provision of level-access showers under the DFG programme. As I said, it is a mandatory right for disabled persons to receive a grant for the provision of certain facilities to their homes. Section 23(1)(f) of the Housing Grants, Construction and Regeneration Act 1996 provides that grant must be paid to facilitate access by the disabled person to a room with a bath or shower, and to facilitate the use of such a facility by the disabled occupant.
	In deciding whether to approve a DFG application, the local housing authority must consult with social services. In practice, that usually means that an occupational therapist employed by social services will assess the disabled person's needs. This must be with regard to the provisions of the DFG legislation that I have just quoted. If the disability of the applicant is such as to prevent access to the existing bath or shower, a new accessible adaptation will have to be provided, usually by means of a level-access shower. I entirely accept my hon. Friend's comments that that part of the process—the occupational therapist's assessment of the applicant—is in many cases the cause of the delay. That needs to be looked at.
	The DFG legislation is also specific about the timetable for delivering the adaptations. Under the 1996 Act, the local authority is required to respond to any full grant application for DFG within six months. The local authority may delay the payment of any grant in cases where it has exhausted its annual budget, but for no longer than one year after the date of the full application. Government guidance states clearly that such delays should not occur in urgent cases where there is a serious health risk to the applicant. I accept my hon. Friend's point that often people go through the process of applying for such adaptations in times of adversity or trauma—for example, after a partner has suffered a stroke, as in the case of her constituent, which my hon. Friend quoted. Such cases should be treated as urgent.
	I am aware that many local authorities use various methods of prioritising DFG applicants to highlight cases where urgent action is necessary. This is a sensible procedure which the Office of the Deputy Prime Minister encourages. I am also aware that some local authorities do not give very high priority to access to a bath or shower. Although that is a matter for the local authority, I must emphasise that it cannot lawfully override the mandatory right of a disabled person to have access to a shower or a bath.
	Further delay can also occur because there are a number of procedures that have to be completed before a full DFG application can be made and the six months' clock starts to tick. It is at this stage that delays of two or three years can begin. An assessment by social services must be undertaken, and the applicant must submit tenders for the work to be carried out. Guidance from the ODPM has emphasised that the procedures should not be used to delay applications unduly, and we will repeat this advice and set out target times for the complete adaptation process in our new guidance. The guidance will state that waiting times for any adaptation of more than 250 working days, from the point of initial inquiry to completion, are unacceptable.
	I have described the DFG process in some detail in order to point out that the legislation in place adequately provides for the provision of level-access showers to disabled persons who cannot use existing facilities. These mandatory provisions apply to disabled persons in the private sector as well as to tenants, including those in local authority-owned stock. It is for local authorities to honour their statutory duties.
	Nationally, we have provided additional resources for DFG to ensure that that can happen, and in Sheffield's case we have provided all the DFG resources that the council has asked for and it is now taking action in that regard. In relation to their own stock, the Government provide authorities with significant resources to invest in council housing. These resources are not hypothecated to particular items of expenditure. It is for an authority to decide how much of those and other available resources it should allocate to renovation, improvement or other work such as adaptations for disabled persons, having regard to its legal obligations. I am pleased to hear from my hon. Friend that Sheffield council has decided to allocate additional resources for that purpose.
	My hon. Friend also raised the issue of what more can be done in the design of new homes to facilitate the provision of level-access showers where needed. I take her point about that being a peculiarly Anglo-Saxon problem that is not of much concern or interest on the continent.
	Since late 1999, part M of the building regulations has provided that new houses must make provision to manage the needs of family members who may become disabled. New homes are now required to include reasonable provision for disabled people to gain access to and make use of them, and a WC and washbasin should be provided on the same storey as the entrance. We keep the building regulations under review. We are currently reviewing the relevant sections that apply to non-domestic buildings and we may wish to review the sections covering domestic buildings at a future date, but my hon. Friend will understand that I can give no precise undertakings to that effect tonight.
	However, I can say that, following the changes made in 1999, the Joseph Rowntree Foundation published a guide entitled "Meeting Part M and Designing Lifetime Homes", which contained a foreword by my right hon. Friend the Minister for Local Government and the Regions, then Minister with responsibility for construction. The guide sets out a lifetime homes standard that includes a wheelchair-accessible entrance-level WC with drainage provision enabling a shower to be fitted. I can do no more than quote from and heartily agree with my right hon. Friend's words in the foreword:
	"This guide highlights the benefit of a little extra thought and care that needs to go into housing design in order to add the flexibility and adaptability found in lifetime homes. A number of local authorities also encourage use of Lifetime Home standards and house builders may also wish to go beyond Part M, as a minimum regulatory standard as they strive for excellence."
	I completely endorse that view. As my hon. Friend said, if the lifetime home standards are endorsed, they will eventually eradicate the problems. The Office of the Deputy Prime Minister is encouraging new home builders to go for the lifetime standards model.
	These are important matters and my hon. Friend has raised some important ideas. I shall not stand here at 11.40 pm and say, "Yes, they're all lovely and I'll go off and implement them", but I am more than happy to meet her and some of her colleagues—I fear that if she brings along the entire list of consultees, there will be no room in the Department, let alone my office—further to discuss this important matter. DFG has worked well in the past and it will continue to do so. Many of the issues that she highlights, including lifetime standards, delays and others are worth exploring further and I shall happily discuss them with her and some of the consultees with whom she worked.
	I congratulate my hon. Friend again on securing the debate and raising these important issues, which concern a range of people in her constituency, mine and everybody else's. Such people very often fall through the cracks and disappear for want of strong voices. She is clearly a strong voice in support of her disabled constituents and raises issues whose importance is writ large throughout the country. I hope that we can together take matters forward and turn a good system into an even better one.
	Question put and agreed to.
	Adjourned accordingly at seventeen minutes to Twelve o'clock.